What is "balance sheet"

Balance \Bal"ance\ (b[a^]l"ans), n. [OE. balaunce, F. balance, fr. L. bilanx, bilancis, having two scales; bis twice (akin to E. two) + lanx plate, scale.]

1. An apparatus for weighing.

   Note: In its simplest form, a balance consists of a beam or lever supported exactly in the middle, having two scales or basins of equal weight suspended from its extremities. Another form is that of the Roman balance, our steelyard, consisting of a lever or beam, suspended near one of its extremities, on the longer arm of which a counterpoise slides. The name is also given to other forms of apparatus for weighing bodies, as to the combinations of levers making up platform scales; and even to devices for weighing by the elasticity of a spring.

2. Act of weighing mentally; comparison; estimate.

   A fair balance of the advantages on either side.
   --Atterbury.

3. Equipoise between the weights in opposite scales.

4. The state of being in equipoise; equilibrium; even adjustment; steadiness.

   And hung a bottle on each side To make his balance true.
   --Cowper.

   The order and balance of the country were destroyed.
   --Buckle.

   English workmen completely lose their balance.
   --J. S. Mill.

5. An equality between the sums total of the two sides of an account; as, to bring one's accounts to a balance; -- also, the excess on either side; as, the balance of an account. ``A balance at the banker's.''
   --Thackeray.

   I still think the balance of probabilities leans towards the account given in the text.
   --J. Peile.

6. (Horol.) A balance wheel, as of a watch, or clock. See Balance wheel (in the Vocabulary).

7. (Astron.)

   1. The constellation Libra.

   2. The seventh sign in the Zodiac, called Libra, which the sun enters at the equinox in September.

8. A movement in dancing. See Balance, v. t., 8.

   Balance electrometer, a kind of balance, with a poised beam, which indicates, by weights suspended from one arm, the mutual attraction of oppositely electrified surfaces.
   --Knight.

   Balance fish. (Zo["o]l) See Hammerhead.

   Balance knife, a carving or table knife the handle of which overbalances the blade, and so keeps it from contact with the table.

   Balance of power (Politics), such an adjustment of power among sovereign states that no one state is in a position to interfere with the independence of the others; international equilibrium; also, the ability (of a state or a third party within a state) to control the relations between sovereign states or between dominant parties in a state.

   Balance sheet (Bookkeeping), a paper showing the balances of the open accounts of a business, the debit and credit balances footing up equally, if the system of accounts be complete and the balances correctly taken.

   Balance thermometer, a thermometer mounted as a balance so that the movement of the mercurial column changes the inclination of the tube. With the aid of electrical or mechanical devices adapted to it, it is used for the automatic regulation of the temperature of rooms warmed artificially, and as a fire alarm.

   Balance of torsion. See Torsion Balance.

   Balance of trade (Pol. Econ.), an equilibrium between the money values of the exports and imports of a country; or more commonly, the amount required on one side or the other to make such an equilibrium.

   Balance valve, a valve whose surfaces are so arranged that the fluid pressure tending to seat, and that tending to unseat, the valve, are nearly in equilibrium; esp., a puppet valve which is made to operate easily by the admission of steam to both sides. See Puppet valve.

   Hydrostatic balance. See under Hydrostatic.

   To lay in balance, to put up as a pledge or security. [Obs.]
   --Chaucer.

   To strike a balance, to find out the difference between the debit and credit sides of an account.

n. (context accounting English): A summary of a person's or organization's asset, liability and equity as of a specific date.

n. a record of the financial situation of an institution on a particular date by listing its assets and the claims against those assets

In financial accounting, a '''balance sheet ''' or statement of financial position is a summary of the financial balances of an individual or organisation, whether it be a sole proprietorship, a business partnership, a corporation, Private limited company or other organization such as Government or not-for-profit entity. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A balance sheet is often described as a "snapshot of a company's financial condition". Of the four basic financial statements, the balance sheet is the only statement which applies to a single point in time of a business' calendar year.

A standard company balance sheet has three parts: assets, liabilities, and ownership equity. The main categories of assets are usually listed first, and typically in order of liquidity. Assets are followed by the liabilities. The difference between the assets and the liabilities is known as equity or the net assets or the net worth or capital of the company and according to the accounting equation, net worth must equal assets minus liabilities.

Another way to look at the balance sheet equation is that total assets equals liabilities plus owner's equity. Looking at the equation in this way shows how assets were financed: either by borrowing money (liability) or by using the owner's money (owner's or shareholders' equity). Balance sheets are usually presented with assets in one section and liabilities and net worth in the other section with the two sections "balancing".

A business operating entirely in cash can measure its profits by withdrawing the entire bank balance at the end of the period, plus any cash in hand. However, many businesses are not paid immediately; they build up inventories of goods and they acquire buildings and equipment. In other words: businesses have assets and so they cannot, even if they want to, immediately turn these into cash at the end of each period. Often, these businesses owe money to suppliers and to tax authorities, and the proprietors do not withdraw all their original capital and profits at the end of each period. In other words, businesses also have liabilities.