Balance Sheet
Definition
The Balance Sheet shows what a business owns (assets), what it owes (liabilities), and what is left for the owner (equity) on a single date. It must always balance: Assets = Liabilities + Equity.
Example
On December 31, a business has $20,000 in assets, $8,000 in liabilities, and $12,000 in equity. The Balance Sheet shows the financial position on that specific date.
Why It Matters
The Balance Sheet is a snapshot of financial health. It shows whether the business has more assets than debts and whether equity is growing.