Balance Sheet (Statement of Financial Position)
What is a Balance Sheet?
A Balance Sheet (Statement of Financial Position) is a financial report providing a snapshot of your business's financial condition at a specific point in time, reporting total owned Assets balanced against external Liabilities and Net Owner's Equity.
The Balance Sheet Equation
Balance Sheet Sections
| Category | Typical Line Items |
|---|---|
| Assets (Owned) | Cash, bank accounts, office equipment, furniture, customer receivables |
| Liabilities (Owed) | Supplier payables (AP), bank loans, accrued expenses |
| Owner's Equity (Net Worth) | Contributed capital + cumulative Retained Earnings − Owner draws |
Frequently Asked Questions
Because it balances two equal sides: Assets on one side, equals Liabilities plus Owner's Equity on the other side.
An Income Statement measures operating profitability over a period. A Balance Sheet reports cumulative financial standing at a single specific date.
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