Balance Sheet

A balance sheet is a financial statement, used in accounting, to present an enterprise’s financial position at a specific date.

The balance sheet is also called the statement of financial position.

The balance sheet is constructed on the simple accounting formula which is:-

Capital = Assets – Liabilities

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So, the balance sheet discloses all the resources which a company owns — all its assets — and all the liabilities which it owes — like creditor payments, short-term loans etc.

The balance sheet is constructed with two halves placed side by side, one representing the assets and the other liabilities. After tallying both the sides, it becomes clear whether assets exceed liabilities or not. If assets exceed liabilities, it denotes the capital that is with the company.