Balance Sheet A balance sheet is a snapshot of a business’ financial condition at a specific moment in time, usually at the close of an accounting period. A balance sheet comprises assets, liabilities, and owners’ or stockholders’ equity. Assets and liabilities are divided into short- and long-term obligations including cash accounts such as checking, money market, or government securities. At any given time, assets must equal liabilities plus owners’ equity. An asset is anything the business owns that has monetary value. Liabilities are the claims of creditors against the assets of the business.

The balance sheet must balance—that's why it's called a balance sheet. In other words, the assets must equal the claims on assets. The concept of balancing relies on the accounting equation:
Assets = Liabilities + Owner’s Equity (Capital)

There are a lot of tricks to reading a balance sheet which we won't get into here, but it's good to know you can go about doing your business and automatically keep this important document up to date.