Definition of Balance Sheet

A balance sheet is a report financial statement that accounts for the state of the economy Y finance of a institution at a time or for a certain period of time.

The balance sheet, also known as the statement of equity or balance sheet, is a set of data and information presented as a final document that includes an overview of the situation financial of an entity or company and that often takes place once a year. The balance sheet or statement of position combines in itself the concepts of assets, liabilities and heritage net, as the three fundamental elements that make up the accounting of an institution.

The first of them, the asset, deals with the securities accounts that the company has, that is, elements capable of generating income through the use, sale or transfer of exchange.
Liabilities, on the other hand, constitute the obligations and contingencies to which attention must be paid, such as loans, purchases and other medium or long-term transactions. Finally, the net worth comes to represent the assets minus the liabilities, that is, the contributions of shareholders and other investors who, in short, realize the self-financing capacity available to them the company.

Assets include all those accounts that reflect the values ​​held by the entity. All assets are likely to bring money to the company in the future, either through use, sale or exchange. On the contrary, the liability shows all the certain obligations of the entity and the contingencies that must be recorded. These obligations are, of course, economic: loans, purchases with deferred payment, etc.

In other words, the net worth that will be the key axis of the balance sheet is a conclusion between what the company has, what it owes and, therefore, what it authentically owns, that is, the final state of its accounting.