Which document reflects a business's financial position, including assets and liabilities?

The document that reflects a business's financial position, including assets and liabilities, is the balance sheet. This financial statement provides a snapshot of what a company owns (assets) and what it owes (liabilities) at a specific point in time. The balance sheet is structured around the accounting equation: Assets = Liabilities + Equity, clearly showcasing how everything balances out.

While the statement of financial position is another term used to refer to the balance sheet, the most widely recognized term in traditional accounting context is indeed "balance sheet." Therefore, the correct choice emphasizes the traditional terminology.

In contrast, the income statement focuses on the company’s revenues and expenses over a period, resulting in net profit or loss, rather than showing a specific point in time. The cash flow statement outlines cash inflows and outflows, providing insights into the liquidity of the business, but does not directly reflect the overall financial position. Thus, the balance sheet serves the most precise purpose in illustrating a business's assets and liabilities.