Sections:

Financial Statements of Sole Proprietorship, Page 9

The Purpose of the Balance Sheet a person standing with a backdrop of multistoried business complex.

The balance sheet is the third financial statement of a sole proprietorship. It is a financial statement showing the financial position of an enterprise by summarizing its assets, liabilities, and owner’s equity at a given point in time. It is usually created at the close of the last day of the month or year.

In brief, a balance sheet reports: 

  • Assets (What a business owns)
  • Liabilities (What a business owes) 
  • Owner’s Equity (What a business is worth)