A balance sheet shows many items of interest to managers, investors, and business owners, such as the assets, liabilities, and equity of a business at a certain point in time. The structure of a balance sheet follows the basic accounting equation:
Assets = Liabilities + Equity
The balance sheet consists of three sections. Click the tabs below to learn more about the three different sections.
Assets
Liabilities
Equity
An asset is what the company owns at a certain date. This section of the balance sheet shows inventory balances in retail and manufacturing businesses. Companies often classify assets as current or long term.
A liability are debts and other amounts owed by the company at a certain date. Companies often classify liabilities as current or long term.
Equity is the value of what the owner owns at a certain date.