What is the function of a balance sheet?

The function of a balance sheet is to provide a snapshot of a company's financial position at a specific point in time. This includes a detailed account of the company's assets, liabilities, and equity, which helps stakeholders understand what the company owns and owes, as well as the residual interest of the owners.

By listing assets, the balance sheet reflects what the company controls that has economic value—such as cash, inventory, property, and equipment. Liabilities represent what the company is obligated to pay, including loans and accounts payable. The equity section indicates the ownership interest in the company, showing the net assets after liabilities are subtracted from assets.

In contrast, the other options describe different financial documents or metrics. Potential investments fit better in the context of investment analysis or a business plan rather than in a balance sheet function. Summarizing cash flow over a period is the role of a cash flow statement, while calculating future profits based on current assets aligns with financial forecasting or modeling, not a balance sheet's purpose. Therefore, option C accurately captures the primary function of a balance sheet.