In a financial statement, balance sheet provides information regarding the financial position of the company at particular date. It is a snapshot of the financial position of the company at that point in time.
Balance sheet shows what a company owns, what it owes and the value of the company to the owners, on date that it is prepared. Consequently, a balance sheet is made up of three parts, which are:
1. Assets : What a company owns
2. Liabilities: What a company owes
3. Shareholders' Equity: The value of the company to its owners.
Since the company holds assets that it uses to generate revenue. These assets are funded either by shareholders' equity or by liabilities. This relationship is expressed in the accounting equation: Assets = Liabilities + Shareholders' Equity
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