What document provides a snapshot of assets, liabilities, and equity at a specific time?

The balance sheet is the document that provides a snapshot of a company's assets, liabilities, and equity at a specific point in time. It presents a comprehensive view of what the company owns (assets) and what it owes (liabilities), alongside the equity that belongs to the owners. This structure allows stakeholders to evaluate the financial position of the entity and assess its stability and liquidity.

The balance sheet follows the accounting equation, which states that assets equal liabilities plus equity. This equation highlights the relationship between these three categories and is fundamental to understanding the organization’s net worth. Stakeholders, such as investors, creditors, and management, use the balance sheet to analyze financial health, review resource investment, and make informed decisions.

In contrast, the income statement focuses on the company’s performance over a specific period, detailing revenues and expenses to show how profit or loss is generated. The cash flow statement tracks the flow of cash in and out of the business, categorizing activities into operating, investing, and financing sections. The statement of retained earnings outlines changes in equity, specifically how profits are distributed or retained over time, rather than providing a comprehensive snapshot of all assets and liabilities at once.