The Correct Definition Of A Balance Sheet Includes Which Of The Following Statements?

The options 2, 3 and 5 are the correct choices as the Balance Sheet shows the financial position of Permanent Accounts, which Assets, Liabilities and Equity, at a specific time on a particular date. For example, at a time, assets such as cash in hand was at $50,000 on 9 A.M on 31^st December, 2024. Suppose, at 5 P.M, the position of cash in hand was $30,000 on 31^st December, 2024. So, the monetary value of assets, liabilities and equity changes with the passage of time but the equality among assets, liabilities and equity remains throughout the accounting period. Such equality among assets, liabilities and equity represents Account Equation. So, a balance sheet also a representation of accounting position.

Other options are incorrect as the balance sheet is not prepared for a period but for a specific time on a particular date of accounting period. Other Financial Statements such as Income Statement, Statement of Retained Earnings and Statement of Cash Flows are prepared and reported for the accounting period. For example, if the rent expense for the accounting period (e.g., accounting period is one year) is recorded as $12,000. then it is recorded in the income statement for the current accounting period (from starting of the period to the ending) on expense side but rent expense account is not recorded in the income statement on a particular time of a particular date. Any portion of rent which is not related to the current accounting period is not recorded in the income statement. For example, if rent paid in advance $12,000 (per month rent of $1,000) on 1^st October, 2024, then rent for the current period ending on 31^st December, 2024, is for 3 months (from October to December) is $3,000. So, only rent of $3,000 is charged to expense in income statement for current period and remaining $9,000 will charged to expense in the income statement on the next accounting period when the prepaid rent expired on every month.