A financial statement that shows what a company owns (assets), what it owes (liabilities), and the difference between them (shareholders' equity) at a specific point in time. It is like a snapshot of a company's financial health on a single date. The balance sheet always follows this equation: assets equal liabilities plus equity.
On December 31, a coffee company's balance sheet shows assets of $500,000 including cash and equipment. It owes $200,000 in loans and other debts (liabilities). The shareholders' equity is therefore $300,000. This tells you the company is worth $300,000 to its owners after all debts are paid.
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