ESB Certification Practice Exam 2025 – Complete Study Resource

A balance sheet is a financial statement that provides a snapshot of a company's assets, liabilities, and equity at a specific point in time. It adheres to the accounting equation where Assets = Liabilities + Equity.

In this context, the correct answer is that gross sales are not included in a balance sheet. Gross sales refer to the total revenue generated by a company from its sales activities before any deductions such as returns, allowances, or discounts. This figure is typically found on the income statement, which reflects a company's performance over a period of time rather than its financial position at a specific moment.

Assets, liabilities, and equity are fundamental components of the balance sheet. Assets represent resources owned by the company that provide future economic benefits. Liabilities reflect obligations the company owes to outside parties, while equity represents the owner's claims to the company's resources after all liabilities have been settled. Each of these components directly supports the financial picture that a balance sheet aims to portray, making their inclusion essential.