Understanding the Balance Sheet

The balance sheet is a financial statement of investment in a business – including assets, liabilities, and shareholder’s equity – at a specific time and reports the sources and uses of funds. The balance sheet must balance because the two halves explain where the money came from and where it is now. The sources of funds included on the balance sheet include share capital, loan capital, and retained profits and uses of funds include fixed assets and working capital. This course, part of the Balance Sheet series, also touches on common misconceptions about the balance sheet and different formats that may be used when reporting to different audiences.