The Balance Sheet
The balance sheet (or statement of financial position) presents a snapshot of a
company’s (i.e., its assets) and the claims against those resources (i.e.,
its liabilities and or capital) at a specific point of time. The
assets section of the balance sheet the effects of all of the
company’s past decisions. The liabilities and owners’ equity section
reports the effects of all of the company’s past financing decisions.
Capital is from short and long-term creditors and from owners. Thus,
the balance sheet reflects the following :
Assets = Liabilities + Owners’ Equity