Balance Sheet:

What is Balance Sheet:

A balance sheet is a snapshot of your business’ financial position on a given day, usually calculated at the end of a quarter or year. It is a summary of your company’s assets, liabilities/obligations, and owner’s financial involvement.

A balance sheet is therefore a financial statement that summarizes a company’s assets, liabilities and shareholders’ equity at a specific point in time. These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by the shareholders.

The balance sheet adheres to the following formula:

Assets = Liabilities + Shareholders’ Equity

Types of Balance Sheet:

Mainly, there are two forms of balance sheet that exists. They are:

• Report Form Balance Sheet
• Account Form Balance Sheet

In addition, Individuals and small businesses tend to have simple balance sheets. Larger businesses tend to have more complex more complex balance sheets, and these are presented in the organisation’s annual report.

Need of balance sheet:

A company/business/corporation needs a Balance sheet when it applies for loans or grants, submitting taxes, or seeking investors. A Balance Sheet is how a business can verify that all their financial records are in check.

There are essentially three accounting categories in the Balance Sheet to keep track of your finances at a given point in time:

• Assets
• Liabilities
• Stockholders' Equity (or Shareholders' Equity)

Assets = Liabilities + Shareholders’ Equity