What does it mean when a balance sheet balances?
For a balance sheet to actually balance, assets has to equal the sum of liabilities and equity. As you can see in the visual below, the balance sheet is balanced because assets = $150 and the sum of liabilities + equity = $150.
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What is a balance sheet?
The balance sheet represents the assets, liabilities, and equity at a point in time (e.g. December 31st, Year 1) and not over a period of time (January 1, Year 1 to December 31st, Year 1). The balance sheet is a key part of a company’s financial statements, along with the income statement and statement of […]