Which document provides a snapshot of both assets and liabilities at a specific point in time?

The balance sheet is the document that provides a snapshot of both assets and liabilities at a specific point in time. It is also known as the statement of financial position. The balance sheet is structured to show what a company owns (assets) and what it owes (liabilities) at a particular date, allowing stakeholders to assess the financial health and stability of the entity.

The balance sheet follows the accounting equation, where assets are equal to the sum of liabilities and equity. This means that for every resource owned by the company, there is a corresponding claim or obligation. Therefore, by reviewing the balance sheet, one can quickly ascertain the overall financial situation of a business.

In contrast, an income statement shows the revenues and expenses over a period of time, providing insight into the company’s operational performance but not its financial position at a specific moment. The cash flow statement tracks the flow of cash in and out of the business over a period, focusing on liquidity rather than the balance of assets and liabilities at a single point in time. Lastly, the statement of retained earnings summarizes changes in retained earnings over a reporting period but does not provide a comprehensive view of both assets and liabilities like the balance sheet does.