A balance sheet is a financial statement that provides a snapshot of a company’s financial position at a particular point in time. It shows the company’s assets, liabilities, and equity.
The assets listed on the balance sheet include anything that the company owns that has value, such as cash, investments, property, equipment, and inventory. The liabilities listed on the balance sheet include anything that the company owes, such as loans, accounts payable, and other debts. The equity section of the balance sheet shows how much of the company’s assets are owned by shareholders.
The balance sheet is called a balance sheet because it must balance. This means that the total value of the assets must equal the total value of the liabilities and equity. The balance sheet is an important financial statement because it helps investors, creditors, and other stakeholders understand a company’s financial health and how it is managing its resources.