Which financial statement provides a snapshot of a municipality’s assets and liabilities?

The balance sheet is the financial statement that offers a snapshot of a municipality's assets and liabilities at a specific point in time. It follows the accounting equation where assets equal liabilities plus equity, providing a clear view of what the municipality owns (assets) and what it owes (liabilities). This information is crucial for financial analysis, allowing stakeholders to assess the financial health of the municipality.

In contrast, the income statement focuses primarily on the revenues and expenses over a period of time, detailing how much money came in and how much was spent, which does not provide a direct snapshot of assets and liabilities. The cash flow statement tracks the cash inflows and outflows, reflecting the liquidity of the municipality but not its overall financial position. Lastly, the statement of changes in equity outlines changes in funding sources and retained earnings but, like the aforementioned statements, does not encapsulate both assets and liabilities. Thus, the balance sheet stands out as the key financial document for understanding a municipality's financial status at a given moment.