As a small business owner, you may turn to either your balance sheet or profit and loss statement to understand how your business is doing financially. Whereas your profit and loss statement can quickly show your expenses versus your income, it doesn't specify your current assets and pending liabilities like a balance sheet does. While many other financial reports simply show you transactions that have already occurred, a balance sheet gives you an idea of things that need to occur soon. If you've just made a huge sale, your profit and loss statement may show your "business health" as great, whereas your balance sheet would also show the huge bill you owe a vendor within the next 30 days. It is a more accurate picture of your business's status.