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What is a Balance Sheet?

by Team Goseeko

The Balance Sheet provides a statement of a company’s Assets, liabilities, and shareholders’ equity at a particular point in time. They report a snapshot of what your business owns, what it owes, and the amount invested by that owner in a single day.

What are the elements on the Balance Sheet?

The Balance Sheet consists of the following elements:


An asset is owned by a company and retains some quantifiable value. That is, it can be liquidated and turned into cash. Additionally, they are the goods and resources owned by the company.

Division of Assets:

  1. Liquid Assets are typically cash equivalents, prepaid expenses, inventories, securities, accounts receivable, etc. that a company expects to convert to money within a year.
  2. Fixed assets are long-term investments such as land, equipment, patents, trademarks, and intellectual property that companies do not expect to convert to cash in the short term.


The next section lists the company’s liabilities.

1. Current liabilities include rent, utilities, taxes, current payments for long-term debt, interest payments, and salaries.

2.  Fixed liabilities include deferred taxes and pension fund liabilities.

Shareholders’ Equity

Shareholders’ Equity refers to the amount generated by a business, as a result , the amount invested into the business by its owner (or shareholders), and the capital donated. Finally, we get net worth.

Stakeholder Capital = Total Assets-Total Liability

Balancing of Balance Sheet

The name itself derives from the fact that a company’s assets are equal to its liabilities plus the capital of the issued shareholders. To sum up the reasons of not balancing:

  1. Firstly, Incomplete or misplaced data.
  2. Secondly, Incorrectly entered transaction.
  3. Further more Exchange rate error.
  4. In addition Inventory error.
  5. Moreover Equity calculation is miscalculated.
  6. Lastly, Miscalculated loan amortization or depreciation.

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