Because this topic is important, learn more and have a teacher explain this to you with examples and a quiz, take this Introductory Financial Reporting Tutorial Course Financial Reports Tutorial Course
Return to
Accounting Questions and Answers
What is the Balance Sheet or Statement of Financial Position?
This statement explains the balance of the assets, liabilities and equity ledger accounts as at the reporting period.
As you can see in this example, the balance sheet relationship is represented by the Accounting Equation. Because of this logical equation, the balance sheet balances.
These balances carry forward into the next accounting period because they are ongoing measures of the business financial position.
So the total of the assets on a balance sheet must equal the total of the liabilities and owners equity!
