A Balance Sheet is a financial statement that shows a company’s or individual’s financial position at a specific point in time by listing assets, liabilities, and equity.
A balance sheet is one of the most important financial statements used in accounting and finance. It provides a clear snapshot of what a business owns (assets), what it owes (liabilities), and the owner’s or shareholders’ equity on a particular date.
The balance sheet follows a simple equation:
Assets = Liabilities + Equity
Balance sheets are used by investors, lenders, banks, and management to assess financial stability, liquidity, and solvency. A strong balance sheet indicates good financial health and higher creditworthiness.
"If a company owns assets worth ₹10 lakh and has liabilities of ₹6 lakh, the remaining ₹4 lakh represents the company’s equity shown on the balance sheet."