A balance sheet in bookkeeping is a financial document displaying the company's assets, liabilities and equities at a certain point in time, such as at the end of a month or year, states AccountingTools. The balance sheet is important because it can show whether a company owns more than it owes and thus gives an idea of its financial standing at the document's stated date.
The balance sheet lists assets first. These are things the company owns like investments, equipment, intangible items and cash. Liabilities and stockholders' equity are generally grouped together in a separate section. Liabilities include both short-term and long-term debts while stockholders' equity includes the paid-in capital, company's stock and retained earnings, notes Accounting Coach. In the end, the company's assets will be equal to its total liabilities and stockholders' equity.