Glossary · Financial statements
Balance sheet
A balance sheet is a financial statement that shows what a business owns (assets), what it owes (liabilities) and the owner's stake (equity) on a single date. Assets always equal liabilities plus equity. It is a snapshot of financial position, unlike the profit and loss, which covers a period of time.
Glossary / Balance sheet · Also called statement of financial position
How it works
Assets are listed first, usually current assets (cash, receivables, inventory) then long-term assets (equipment, vehicles, buildings). Liabilities follow, current (payables, credit cards, sales tax owed, payroll owed) then long-term (loans). Equity comes last, including the year's profit to date.
Lenders read the balance sheet to see whether the business can pay its debts. Owners use it to check that balances make sense: a bank balance that matches the statement, receivables that are really collectible, loans that match the lender's figures.
Because the balance sheet carries forward from year to year, an error in it does not go away at year-end. A wrong opening balance or an unreconciled bank account will still be there next year unless someone fixes it.
Worked example: A small company on June 30
A cleaning company has $18,000 in the bank, $9,000 of receivables and $22,000 of equipment and vans, for total assets of $49,000.
It owes $3,000 to suppliers, $2,000 of payroll taxes and $15,000 on a van loan, for $20,000 of liabilities. Equity is therefore $29,000, and $20,000 + $29,000 = $49,000.
| Section | Amount |
|---|---|
| Total assets | $49,000 |
| Total liabilities | $20,000 |
| Equity | $29,000 |
| Liabilities + equity | $49,000 |
In AcboBooks
The Balance Sheet report shows assets, liabilities and equity as of any date, with net income for the year in equity. Click an account to open its register through that date. It exports to Excel or CSV, or prints to PDF.
Related terms
- Profit and loss statement (P&L)
- Cash flow statement
- Owner's equity
- Working capital
- Trial balance (TB)
- Retained earnings
Related on this site
Updated October 25, 2026. General information, not tax, legal or accounting advice. Rules and rates change; check with the IRS, the CRA, your state or province, or your accountant.
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