A Balance sheet is a financial statement that summarises an organisations assets, liabilities and shareholders’ equity at a given time. It will show the following:
- Fixed assets – long-term possessions;
- Current assets – short-term possessions;
- Current liabilities – what the business owes and must repay in the short term; and
- Long-term liabilities – including owner’s or shareholders’ capital.
The balance sheet is so-called because there is a debit (money owing) entry and a credit (money owed) entry for everything.
This means that the total value of the assets is always the same value as the total of the liabilities.