Glossary · Bookkeeping & QuickBooks term
Balance sheet
A snapshot, at a single moment, of what the business owns (assets), owes (liabilities), and is worth to its owners (equity) — where assets always equal liabilities plus equity.
In plain terms
What balance sheet means.
The balance sheet reports, at a single point in time, what a business owns (assets), what it owes (liabilities), and the difference between them, which belongs to the owners (equity). It is governed by the accounting equation: assets = liabilities + equity, which is always true on properly kept books.
Where the profit and loss statement covers a span of time, the balance sheet is a snapshot — the financial position on one date.
What the balance sheet reveals.
The balance sheet answers questions the P&L can’t: how much cash you actually have, how much customers owe you (AR), how much you owe others (AP) and to lenders, and what the business is worth on the books. Lenders and buyers read it first.
A balance sheet that doesn’t balance, or that carries stale balances — an old uncleared loan, negative cash, an AR balance for a customer who paid years ago — is the clearest sign the books need a cleanup. Real bookkeeping keeps every balance-sheet account reconciled, not just the bank.
Put it to work
Stale balances on your balance sheet?
A Certified ProAdvisor reconciles every balance-sheet account — not just the bank — and scopes the cleanup in writing, fixed-fee.