A balance sheet is a key financial statement that presents a snapshot of a company’s financial position at a specific point in time. It provides detailed information about a company’s assets, liabilities, and owner’s equity, following the fundamental accounting equation:

Assets = Liabilities + Owner’s Equity

• Assets represent everything the company owns or controls, such as cash, inventory, equipment, and accounts receivable.

• Liabilities are obligations the company owes to others, including loans, accounts payable, and accrued expenses.

• Owner’s Equity (or shareholders' equity in corporations) reflects the residual interest in the assets after deducting liabilities. It includes items like retained earnings and contributed capital.

The balance sheet is typically divided into two sections: assets on one side, and liabilities plus equity on the other, ensuring that both sides balance. It is used by stakeholders—such as investors, lenders, and management—to assess the company’s financial health, liquidity, and capital structure.

Unlike the income statement, which covers a period of time, the balance sheet shows the financial status at a specific date. It is a vital tool in financial analysis, helping users understand how a company is funding its operations and whether it can meet its short- and long-term obligations.