A balance sheet is a financial statement that provides details concerning a company's assets, liabilities and shareholder equity. This information summarizes a company's overall financial health by revealing what it owns versus what it owes.
The totals of a company's assets and liabilities define its shareholder's equity or capital worth. It refers to the hypothetical cash left over if a company satisfied all of its debts and sold all of its assets. The leftover funds from these transactions is distributed to the shareholders of the company.
Each segment of a balance sheet contains numerous accounts. Assets such as cash and property are detailed in the 'assets' section of the balance sheet, while debts are listed in the 'liability' section.
Assets are listed in order of how quickly they can be converted to liquid cash, while liabilities are listed based on their maturity or due dates. Liabilities are referred to as either long-term or current debts on a balance sheet. Current debts are defined as liabilities that must be paid-off within the current fiscal year, while long-term debts are due sometime beyond the current year.
Balance sheets provide these detailed snapshots at the conclusion of each reporting period. Balance sheets do not list specific transactions or the exchange of assets and liabilities for the accounts mentioned.