What is a balance sheet?
A balance sheet is a financial report showing your business at a specific date: what it owns (assets), what it owes (liabilities), and what is left for its owners (equity). Its two sides must always balance.
Its three components
| Component | Answers the question |
|---|---|
| Assets | What does my business own? |
| Liabilities | What does it owe others? |
| Equity | What is actually left for me? |
The equation that governs it
Assets = Liabilities + Equity
If that equality does not hold, an entry in the books is missing or wrong.
How to read it in a minute
- Look at equity: is it growing against the previous period?
- Compare current assets to current liabilities: is there enough to cover what falls due within a year?
- Check the size of receivables: are they swelling without being collected?
Frequently Asked Questions
Because its two sides are always equal: total assets equal total liabilities plus equity. That balance is a direct consequence of double-entry bookkeeping.
A balance sheet is a snapshot at one moment showing what you own and owe. An income statement covers a whole period and shows revenue, expenses and profit across it.
If your transactions are recorded with double-entry, the balance sheet is built automatically. Qayd generates one in seconds from the transactions you recorded in Arabic.
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