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Accounting Terms
Balance Sheet
Definition
A financial statement showing a company's assets, liabilities, and equity at a specific point in time.
Overview
The balance sheet provides a snapshot of financial position. Assets must equal liabilities plus equity. It shows what you own, owe, and your net worth.
Example
Balance sheet shows: Assets ($100,000), Liabilities ($40,000), Equity ($60,000).
Best Practices
Review monthly, compare periods, and use for loan applications or investor presentations.
Common Mistakes to Avoid
Not updating regularly
Errors in categorization
Missing assets or liabilities
Frequently Asked Questions
How often should I review my balance sheet?
Monthly for active management, quarterly at minimum.