1. The financial statement that reports the assets, liabilities, and stockholders' (owner's) equity at a specific date is the Balance Sheet. This statement provides a snapshot of a company's financial position at a particular point in time. It lists the assets (what the company owns), liabilities (what the company owes), and stockholders' equity (the difference between assets and liabilities representing the owners' stake in the company) as of the date specified.
2. Under the accrual basis of accounting:
- Revenues are reported in the accounting period when services or goods have been delivered, regardless of when the cash is actually received. This means that revenue is recognized when it is earned, not necessarily when the cash is received. For example, if a company provides a service in December but receives payment in January, the revenue would be recognized in December when the service was performed.
3. Expenses are reported in the accounting period when they are incurred, regardless of when the cash is paid. This means that expenses are recognized when they are accrued or when they contribute to generating revenue. For instance, if a company incurs utility expenses in December but pays the bill in January, the expenses would be recognized in December when the utility service was consumed.
