Balance Sheet report

The Balance Sheet is a snapshot at a single date — not a period. It answers: what does the business own, what does it owe, and what is left for the owners?

The three sections

• Assets — bank balances, money owed to you (receivables), and fixed assets at book value.

• Liabilities — bills you owe (payables), GST owing, credit cards and loans.

• Equity — the difference: owner contributions, retained earnings, and current-year profit.

Why it matters

Assets always equal liabilities plus equity — double-entry guarantees it. The practical use: if the bank balances on this report match your actual bank, your books are anchored to reality, which is exactly what reconciling maintains. Receivables growing faster than income is an early warning on collections; equity trending down while profit looks fine usually means drawings are outrunning earnings.

Reading it with the P&L

The Profit & Loss explains the period; the Balance Sheet shows the position it left you in. Lenders and accountants always want both — together they are the whole story.