The main sections of a balance sheet are:
- Assets: This section includes all the items that the company owns and that have monetary value. These can include cash, accounts receivable, inventory, property, plant and equipment, and investments.
- Liabilities: This section includes all the debts and obligations of the company. These can include accounts payable, loans, taxes owed, and other liabilities.
- Equity: This section represents the residual interest in the company’s assets after deducting its liabilities. It includes all the money invested in the company by its owners, plus any earnings retained by the company.
The balance sheet is organized in a way that ensures that the total value of assets always equals the total value of liabilities plus equity. This is known as the accounting equation, which is Assets = Liabilities + Equity.