Balance Sheet

What Is a Balance Sheet?

A balance sheet is a financial statement that provides a snapshot of a company’s financial position at a specific point in time. It details the company’s assets, liabilities, and shareholders’ equity.

Key Takeaways

  • Components: Assets, liabilities, and shareholders’ equity. 
  • Purpose: To show the financial position of a company. 
  • Frequency: Typically prepared at the end of each accounting period.

Structure of a Balance Sheet

  1. Assets: Current and non-current assets, including cash, accounts receivable, and property. 
  2. Liabilities: Current and long-term liabilities, such as accounts payable and long-term debt. 
  3. Equity: Shareholders’ equity, including common stock and retained earnings.

Importance of the Balance Sheet

A balance sheet helps stakeholders assess the financial health of a company, providing insights into its ability to meet short-term and long-term obligations. It is crucial for investors, creditors, and management in making informed financial decisions.


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