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  • Writer's pictureDaniel Levy

What is a Balance Sheet?

A balance sheet is a financial statement that presents a company's financial position at a specific point in time by providing a snapshot of its assets, liabilities, and equity.

Assets represent what the company owns or controls, such as cash, investments, property, and equipment. Liabilities represent what the company owes to others, such as loans, accounts payable, and accrued expenses. Equity represents the difference between the company's assets and liabilities and reflects the owners' investment in the company.

The balance sheet follows the accounting equation, which states that assets must equal liabilities plus equity. This means that the total assets must always be balanced by the total liabilities and equity.

Balance sheets are important financial statements that help investors, analysts, and creditors to evaluate a company's financial health and determine its ability to meet its financial obligations. They are usually prepared at the end of each accounting period, such as a month, quarter, or a year, and provide a useful tool for tracking a company's financial progress over time

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