4 The balance sheet
‘We tend to focus on assets and forget about debts.’
Suze Orman, financial adviser, author and American media personality
In a nutshell
The balance sheet (or statement of financial position) is one of the key financial statements prepared by a company. It shows a company’s financial position at a point in time.
Values are attributed to every asset and every liability to give a net overall position or net worth of a business.
Need to know
It is useful to think of the balance sheet as a snapshot of the business’s assets and liabilities. It is a static document and a business should take repeated snapshots at fixed intervals (usually annually and also more frequently) if it wishes to see how the assets and liabilities change ...