what is balance sheet?

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  • Sandy
    Lv 7
    1 decade ago
    Favorite Answer

    The balance sheet reveals the assets, liabilities, and equity of a company. In examining a balance sheet, you should always be mindful that the components listed in a balance sheet are not necessarily at fair value. Many assets are carried at historical cost, and other assets are not reported at all (such as the value of a company's brand name, patents, and other internally developed resources). Nevertheless, careful examination of the balance sheet is essential to analysis of a company's overall financial condition. To facilitate proper analysis, accountants will often divide the balance sheet into categories or classifications. The result is that important groups of accounts can be identified and subtotaled. Such balance sheets are called "classified balance sheets."

    The site gives you full explanation plus illustration.

  • 5 years ago

    G'day Rahim Jahar, Thank you for your question. A balance sheet can't do anything but balance. It shows the assets, the liabilities (money it owes) and shareholder equity which is the balance of the two. According to Investopedia: "The balance sheet must follow the following formula: Assets = Liabilities + Shareholders' Equity" Ideally, the level of shareholders (or stockholders) equity as compared to liabilities on the right side of the balance sheet is relatively high. A company where assets is equal to liabilities is on the verge of insolvency. Regards

  • 6 years ago

    It is vital to remember that a balance sheet at the day’s end has to balance all the business transaction that occurred. The assets must equal both the liabilities as well as the equity. At the conclusion of a particular accounting period balance sheets are provided.

    As a business owner, when you look at your balance sheet, you obtain vital information regarding your organization. You can swiftly calculate whether your business is lucrative or not. It will explain whether your business is having problem with your creditors, or account payable compilation & account receivable, or whether your business has to be improved with short-term or long-term investments or loans.

    Evaluation of the current balance sheet with the previous year balance sheet will display your business’ trends, from extended receivables to less equity.

  • 1 decade ago

    Its a sheet, which represents a snapshot of a company's Assets, Liabilities (debt), and the resulting net worth.

    Net worth is Assets minus Liabilities.

    Together... Assets = Liabilities + Net worth

    Source(s): I have an MBA in finance and work in Banking
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  • 1 decade ago

    It is a statement of all the book values and assets of a business. Assets=liabilities +owners equity.

    Source(s): Accounting major
  • 1 decade ago

    It shows the assets, liabilities, and equity of a company.

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