Answer (B) is correct . The statement of financial position, or balance sheet, provides information about an entity’s resource structure (assets) and financing structure (liabilities and equity) at a moment in time. According to the FASB’s Conceptual Framework, the statement of financial position does not purport to show the value of a business, but it enables investors, creditors, and other users to make their own estimates of value. It helps users to assess liquidity, financial flexibility, profitability, and risk.
Answer (A) is incorrect because Providing information to help assess the amount, timing, and uncertainty of cash flows is an objective of the statement of cash flows.
Answer (C) is incorrect because The primary focus of financial reporting is information about an enterprise’s performance provided by measures of earnings and its components. Hence, an income statement is more directly useful to investors and creditors for evaluating economic performance.
Answer (D) is incorrect because Disclosures of changes in shareholders’ equity, in either the basic statements, the notes thereto, or a separate statement, help users to evaluate changes in the ownership equity of a firm.
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