Balance Sheet,

Assets = Liabilities + Owner's Equity


In short, a Balance Sheet is a report that gives you a summary of the financial situation of a business on any given date.

The balancing act

It will show you the total value of your company's assets, liabilities, and equity.

Interestingly enough, it got it's name because the total of the assets is always exactly equal (in balance)to the combined total of the liabilities and equity.

The formula looks like this: Assets = Liabilities + Owner's Equity. And is also known as the Accounting Equation.



There are many different bookkeeping accounts that appear on the report.

The different bookkeeping accounts you will find can be thought of as all of the things (including money) that you own and the debts that you owe.

This would include things like bank accounts, property (buildings), equipment, furniture and amounts that people owe you (Accounts Receivable).

This also includes all of your liabilities such as bank loans, credit cards, and amounts you owe to other people (Accounts Payable).

Additional types of bookkeeping accounts that you will find are the equity accounts. These indicate what your business is worth and include all of the money (investments) that the owners have put into the company.

The equity of your company is the total of all of your assets (what you own) minus the total of all of your liabilities (what you owe). This is also know as the net worth of your company.

Now the formula would look like this: Equity = Assets - Liabilities



A sample report might look something like this...








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Learn about the Accounts Payable

Learn about the Accounts Receivable

Learn about the Chart of Accounts

Learn about the Profit and Loss Statement

Return from Balance Sheet, to Bookkeeping 101

Return to Bookkeeping Basics Home Page


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