Glossary · Accounting & Audit
Balance Sheet
A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.
The balance sheet follows the fundamental accounting equation: Assets = Liabilities + Equity. It is one of the three core financial statements (with the P&L and Cash Flow). Companies in India must prepare it in the format prescribed under Schedule III of the Companies Act, 2013, distinguishing current and non-current assets and liabilities. The balance sheet is essential for assessing liquidity, solvency, and capital structure.
Examples
A startup with ₹10 lakh cash, ₹5 lakh equipment, and ₹3 lakh owner investment shows assets ₹15 lakh = liabilities ₹0 + equity ₹15 lakh on the balance sheet.