What component of a balance sheet lists what a business owns and owes?

The correct choice is due to the fact that a balance sheet is a financial statement that provides a snapshot of a company’s financial position at a specific point in time. It is divided into two main sections: assets, which represent what the business owns, and liabilities, which represent what the business owes.

Assets include items such as cash, inventory, property, and equipment, while liabilities encompass debts and obligations like loans, accounts payable, and mortgages. The balance sheet fundamentally follows the equation: Assets = Liabilities + Owner’s Equity, illustrating that what the business owns (assets) is financed either through borrowing (liabilities) or through the owner’s invested capital (equity).

Other components, such as owner’s equity, specifically reflect the owner's interest in the company after liabilities are subtracted from assets, and cash flow pertains to the movement of cash in and out of the business, which is not what the balance sheet explicitly details. Revenue involves the income generated from operations and is reported on the income statement rather than the balance sheet. Thus, the component that encapsulates both what a business owns and owes is indeed assets and liabilities.