Financial Statements – What is a Balance Sheet?
The balance sheet shows an organization’s assets, liabilities and net worth. The organization’s assets must be equal to the sum of its liabilities (debts) plus equity in order to balance.
Assets are items an organization owns that have value; meaning, they can be sold or leveraged to make services or products which can be sold.
Liabilities are debts owed by the business to another organization or individual.
Net worth, or equity, is what an organization would have if all assets were sold and all liabilities satisfied. An organization’s net worth belongs to its owner and/or any and all shareholders.