Which statement best describes the purpose of a balance sheet?

The purpose of a balance sheet is to provide a snapshot of a company's financial position at a specific point in time. It details what the company owns (assets), what it owes (liabilities), and the residual interest of the owners (equity). This representation allows stakeholders, such as investors, creditors, and management, to assess the company’s financial health, understand its funding structure, and evaluate its liquidity and solvency.

The balance sheet serves as a crucial tool for decision-making by providing insights into the resources available to the company and its obligations, helping to inform future business strategies and performance assessments. This distinct focus on a single moment in time differentiates it from other financial statements such as the income statement, which looks at profitability over a period, or the cash flow statement, which summarizes cash movements.

The other options address different financial concepts that do not align with the primary function of a balance sheet.