Explain Balance Sheet: Define Assets, Liabilities, and Net Worth

A balance sheet (also called the statement of financial position), can be defined as a statement of a firm’s assets, liabilities, and net worth. It provides a snapshot of a business at a point in time. These are prepared at the end of an accounting period like a month, quarter or year-end. Comparison of balance sheets over years helps to gauge the financial health of a business. It got its name as assets minus liabilities (net assets) must equal the owner’s equity (they must balance). Every business will generally need a balance sheet while applying for loans or grants, submitting taxes or seeking potential investors.