Jan 17, 2026

Balancing Sheet

• A balance sheet is a financial statement that shows a business’s financial position at a specific point in time. 

• It tells you

What the business owns

What it owes

What is left for the owner(s)

• The basic formula:

Assets = Liabilities + Equity

How do I remember it?

• The Three Main Parts

• Assets – What the business owns (of value)

Cash

Bank balance

Inventory (stock)

Equipment

Buildings

Accounts receivable (money customers owe)

• Liabilities – What the business owes

Debts and obligations:

Loans

Accounts payable (money the business owes suppliers)

Taxes payable

Rent due

• Equity – Owner’s share

What belongs to the owner after debts:

Owner’s capital

Retained earnings (profits kept in the business)