What is a balance sheet based on?

The balance sheet displays the company’s total assets and how the assets are financed, either through either debt or equity. It can also be referred to as a statement of net worth or a statement of financial position. The balance sheet is based on the fundamental equation: Assets = Liabilities + Equity. Image: CFI’s Financial Analysis Course

How do you calculate a balance sheet?

Here are other equations you may encounter: Owners’ Equity = Assets - Liabilities Liabilities = Assets - Owners’ Equity A balance sheet should always balance. Assets must always equal liabilities plus owners’ equity. Owners’ equity must always equal assets minus liabilities. Liabilities must always equal assets minus owners’ equity.

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.