Definition of Balance Sheet

Balance sheet is a financial statement that represents the company’s assets and liabilities as of a specific date. The difference between these two is termed as a company’s net worth.

Points to remember:

• Balance sheet works on the following simple equation:
  Assets= Liabilities + Shareholder’s Equity
• The equation indicates that the company should pay for all its assets by either borrowing money i.e. liabilities or by taking it from the investors which is shown by second term on the right hand side.