{"id":2862,"date":"2023-02-22T21:42:31","date_gmt":"2023-02-22T21:42:31","guid":{"rendered":"https:\/\/course.oeru.org\/ient103\/?page_id=2862"},"modified":"2023-02-22T21:42:31","modified_gmt":"2023-02-22T21:42:31","slug":"balance-sheet","status":"publish","type":"page","link":"https:\/\/course.oeru.org\/ient103\/learning-pathways\/understanding-financial-statements\/balance-sheet\/","title":{"rendered":"Balance sheet"},"content":{"rendered":"
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\u201cA balance sheet<\/b> is a statement of the financial position of a business which states the assets, liabilities and owner’s equity at a particular point in time. In other words, the balance sheet illustrates your business’s net worth.\u201d<\/i> [1]<\/a><\/sup>\n<\/p>\n

A balance sheet is sometimes called a ‘statement of financial position’ or a ‘statement of net worth’. Just like an income statement, a balance sheet helps to illustrate aspects of the financial health of a business. The balance sheet is often considered a ‘snapshot’ of a company’s financial status, because “assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year” [2]<\/a><\/sup>. If a business owner wants to arrange additional finance (for example, with a bank and\/or investors), or is planning on selling the business and needs to determine its net worth (where net worth = assets – liabilities), then an up-to-date balance sheet is essential [3]<\/a><\/sup>.\n<\/p>\n

In a balance sheet, “total assets (what a business owns) must equal liabilities plus equity (how the assets are financed). In other words, the balance sheet must balance” [4]<\/a><\/sup>.\n<\/p>\n

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Read the following texts:\n<\/p>\n