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Which financial statement is like a snapshot of the entity at a specific time? Which financial statement is like a video of the entitys operation during a period of time?
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  • BALANCE SHEET is that financial statement that’s like a snapshot of an entity at a specific time.

This is because Balance Sheet is prepared on the basis of balances existing on a particular DATE.
It shows the financial position of a business on any given day on which that is prepared.
It is for this reason that we use “… at 31 Dec, 20XX” when we prepare Balance Sheet.
This is because it shows where assets, liabilities, and equity stands on that specific time, that is 31 Dec, or as the case may be.

  • INCOME STATEMENT is that financial statement which is like a video of the entity’s operation during a period of time.
    Income Statement contains data balances of Revenues and Expenses earned and incurred during a particular period of time.
    It is for this reason that we write “…for the year ended 31 Dec 20XX” or other similar stuff when we prepare Income Statement.
    Because unlike Balance Sheet (which is prepared for a specific time), Income Statement is prepared for a ‘period of time’ that can be a month, quarter, six months or annual.
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