Balance Sheet
Balance Sheet is a financial statement that shows what a company owns, owes, and its net worth at a specific time.
A Balance Sheet gives a snapshot of a company’s financial position on a particular date. It helps understand how strong or stable a company is financially.
It has three main parts:
Assets: Things the company owns (cash, property, machinery, etc.)
Liabilities: Money the company owes (loans, debts, payables)
Equity: The remaining value for owners after liabilities are deducted from assets
The basic formula is:
Assets = Liabilities + Equity
This means everything the company owns is either funded by borrowing (liabilities) or by owners’ money (equity).
Example:
If a company has assets worth ₹10 lakh and liabilities of ₹6 lakh, then its equity is ₹4 lakh. This ₹4 lakh represents the owners’ share in the company.