What is a balance sheet?
The balance sheet is an overview of the assets, liabilities, and equity of your business. The balance sheet is divided into two parts called assets and liabilities. These two parts must always be balanced or in equilibrium.
The assets consist of the possessions, and the liabilities comprise the equity and the borrowed capital. The assets are financed with the equity and the borrowed capital. The difference between the balance of the assets and the liabilities is the equity.
The balance sheet, along with the profit and loss statement, forms the annual financial statement of your business.
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