What is a balance sheet?
A balance sheet is one of the three core financial statements, presenting a company’s assets, liabilities and shareholders’ equity at a specific point in time. The fundamental accounting equation governs the balance sheet: Assets = Liabilities + Equity.
Balance sheets are critical for assessing solvency, leverage and liquidity, and are a standard component of due-diligence packages, board reports and investor updates. Startups should produce monthly or quarterly balance sheets prepared on accrual basis.