What is a balance sheet?
Balance sheet is the summary of all the financial assets (what your business owns) and the liabilities (what you, as a business owner, own). It also summarizes the lenders and suppliers who have provided funding for the business, and the accumulated funds the owners of the enterprise have invested and left with the business to cover its operating needs.
The purpose of this sheet is to provide what available resources your company has to use at that certain time, and how it’s obtaining them. It also shows how much funding you would have left over once all debt is paid off and all assets are sold.
What are assets? Basically what the company owns in resources that can be measured in dollars. This will be seen as something that can give a boost of future economic benefits to the said company.
What are liabilities? The obligation in which the company has to repay all funds that it was loaned to, fulfill any given commitments and pay for services/goods.
A balance sheet summarizes and concludes an organization/individual’s assets, liabilities, equities, etc. at a specific period in time. There are 2 forms of balance sheet that exist. They are the report form and account form. Though, small businesses and individuals tend to have simple balance sheets – larger companies prepare their balance sheets in segments according to their business.