The Balance Sheet
The balance sheet shows a snapshot of the business’s net worth at a given point in time. Below is a basic balance sheet. Have a look at how it displays the elements of the accounting equation:
Balance Sheet
Assets $ Current Assets
Stock X Debtors X Bank X Cash X
Fixed Assets
Buildings X
Total Assets Vehicles X
XX
Liabilities
Current Liabilities
Overdraft X Creditors X
Long-term Liabilities
Bank Loan X
Total Liabilities XX
Total Assets less Total Liabilities ZZ
Owner’s Capital Y
Retained Earnings Y
Owner’s Equity ZZ
The accounting equation establishes the basis of Double Entry Bookkeeping.