What does a balance sheet summarize at a specific point in time?

A balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific moment in time. It summarizes the assets, liabilities, and shareholders' equity, effectively highlighting what the company owns and owes. The balance sheet follows a fundamental accounting equation: Assets = Liabilities + Equity, which emphasizes the relationship between these elements.

Assets are resources owned by the company that have economic value, while liabilities represent the company's obligations to outside parties. By documenting both, a balance sheet reveals the company's net worth and financial stability. This information is crucial for stakeholders such as investors, creditors, and management to assess the company's financial health.

The other options do not accurately represent what a balance sheet summarizes. Financial performance refers to the company's operations over a period, typically captured in an income statement rather than a balance sheet. External investments are not a comprehensive summary of the entire firm's financial standing. Net income is a measure of profitability over a specific period and is also presented in the income statement, rather than providing a snapshot of financial position at a given point in time like the balance sheet does.