Definition
A balance sheet is a financial statement that shows what a company owns (assets) and what it owes (liabilities) at a specific point in time. It also includes the owner’s or shareholders’ equity. It helps in understanding the financial position of a company.
Example
A company has assets worth Rs 10 lakh (like cash, equipment, etc.) and liabilities of Rs 6 lakh (like loans or dues). The remaining Rs 4 lakh is the company’s equity. This information is shown in the balance sheet.
Caution
A balance sheet reflects a company’s financial position at a specific point in time, but it doesn’t capture its performance over a period, so it should be evaluated alongside other financial statements.