A balance sheet is a financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time. It provides a snapshot of what the company owns and owes.

The balance sheet follows the accounting equation: Assets = Liabilities + Equity. Assets include cash, inventory, property, and equipment; liabilities include loans, accounts payable, and taxes; equity includes retained earnings and share capital. It is one of the three core financial statements, along with the income statement and cash flow statement.

Key points

• Snapshot of assets, liabilities, and equity
• Assets = Liabilities + Equity
• Reported at a point in time
• One of three core financial statements