A balance sheet is often described as a "snapshot of a company's financial condition".Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business' calendar year.
A standard company balance sheet has three parts: assets, liabilities, and ownership equity.
The main categories of assets are usually listed first, and typically in order of liquidity. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities.
Often, these businesses owe money to suppliers and to tax authorities, and the proprietors do not withdraw all their original capital and profits at the end of each period. A balance sheet summarizes an organization or individual's assets, equity and liabilities at a specific point in time. A personal balance sheet lists current assets such as cash in checking accounts and savings accounts, long-term assets such as common stock and real estate, current liabilities such as loan debt and mortgage debt due, or overdue, long-term liabilities such as mortgage and other loan debt.
Securities and real estate values are listed at market value rather than at historical cost or cost basis.
Another way to look at the balance sheet equation is that total assets equals liabilities plus owner's equity.
Looking at the equation in this way shows how assets were financed: either by borrowing money (liability) or by using the owner's money (owner's or shareholders' equity).