Balance Sheets

Again, it’s nothing to do with acrobatics – but we liked the picture!!

The balance sheet is the second-most-important financial statement that an accounting system produces, after an income statementA balance sheet reports on a business’s assets, liabilities, and reserves at a particular point in time

  • The assets shown on a balance sheet are those items that are owned by the business, which have value and for which money was paid
  • The liabilities shown on a balance sheet are those amounts that a business owes to other people, businesses, and government agencies
  • Reserves are the amounts that the charity has generated over the lifetime of its existence

As long as you understand what assets and liabilities are, a balance sheet is easy to understand and interpret