What Does A Balance Sheet Show

A Balance Sheet or Statement of Financial Position shows the financial position of Assets, Liabilities And Owner’s Equity / Equity or Capital of a business on particular time of a specified date. It is reported to all the Users of Financial Statements whether they are internals or externals to the business.

You Can Also Read Out, “What Goes On A Balance Sheet In Accounting”

If both sides of Balance Sheet equalizes, then it means that business uses its resources (Assets) effectively to meet its goals by meeting obligations payable either to Outsiders (Liabilities) such as Creditors / Accounts Payable or to Owners of the business (Internal Resources). This Financial Position actually proves the Accounting Equation as shown below:

Assets = Liabilities + Owner’s Equity