Explaining the Balance Sheet

A balance sheet is a good way to see the big picture of your business’s financial health. It shows a summary of your business’s financial position at a particular point in time. By understanding the numbers in a balance sheet you will be able to identify the strengths and capabilities of your business.

The balance sheet states a number of different aspects of your business’s finances: Assets, Liabilities, and Owner’s Equity. [Hyperlink to related blog posts on each term]

A balance sheet is called as such because if done correctly, your assets should be equal to the sum of your liabilities and equity.

Assets = Liability + Owner’s Equit