How is a balance sheet arranged?

Balance sheets are typically organized according to the following formula: Assets = Liabilities + Owners’ Equity The formula can also be rearranged like so: Owners’ Equity = Assets - Liabilities or Liabilities = Assets - Owners’ Equity A balance sheet must always balance; therefore, this equation should always be true.

What are assets on a balance sheet?

The assets are the operational side of the company, basically a list of what the company owns. Everything listed there is an item that the company has control over and can use to run the business. In a sense, the left side of the balance sheet is the business itself – the buildings, the inventory for sale, the cash from selling goods, etc.

Where do assets and liabilities go on a balance sheet?

So, to recap, you'll find the assets (what's owned) on the left of the balance sheet, liabilities (what's owed) and equity (the owner's share) on the right, and the two sides remain balanced by adjusting the value of equity. And there you have it!