What is the formal financial statement that illustrates assets, liabilities, and owner's equity?

The formal financial statement that illustrates assets, liabilities, and owner's equity is known as the balance sheet. This document provides a snapshot of an organization's financial position at a specific point in time.

On the balance sheet, assets are reported alongside liabilities and owner's equity, adhering to the fundamental accounting equation: Assets = Liabilities + Owner's Equity. This equation is vital as it represents the relationship between what the business owns (assets) and what it owes (liabilities), along with the residual interest of the owners in the net assets.

Understanding the balance sheet is essential in the field of mortuary science or any business, as it helps individuals analyze the financial health of an organization, assess its liquidity and solvency, and make informed decisions regarding financing and investments. It differs from the other statements: the income statement summarizes revenues and expenses over a period, the cash flow statement tracks the flow of cash in and out of the business, and the statement of retained earnings shows changes in equity but does not detail all assets and liabilities.