Balance Sheet

Meaning:

A balance sheet is a special financial statement that shows what a company owns  (its assets) and what it owes (its liabilities) at a specific time. It helps understand the

company’s financial position.

Example:

Imagine a company has ₹5,00,000 in cash and owes ₹2,00,000 to suppliers. The  balance sheet will show these amounts to see if the company is doing well.

How to understand balance sheet:

It lists everything the company owns (assets) and everything it owes (liabilities).

The difference between what it owns and owes is called equity, which belongs to the owners.

Importance of balance sheet:

It helps people see if a company is healthy financially.

It shows if the company can pay its debts and how much money the owners have.