Guiding Questions
In this blog, we’ll explore balance sheets and why they are important. Many people hear the term but don’t know what it actually shows. Common questions include:
- What is a balance sheet?
- What information does it provide?
What Is A Balance Sheet?
A balance sheet is a financial statement that shows what a business owns and owes at a specific point in time.
Main Sections
A balance sheet has three main parts.
- Assets: What the business owns, such as cash and equipment
- Liabilities: What the business owes, such as loans and bills
- Equity: The owner’s share in the business
Why It Matters
Balance sheets help determine a company’s financial position. If assets are greater than liabilities, the business is generally financially stable.
Review
- What does a balance sheet show? Financial position
- What are liabilities? Debts
- What equals Assets − Liabilities? Equity
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