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A Balance Sheet is used to show the financial position of a company at a particular point in time. The balance sheet consists of assets, liabilities and owner's equity in the company. In larger corporations, a balance sheet is usually prepared at the end of each month so that management has an understanding of the corporation's financial position.
The order of items listed in a balance sheet is usually assets, liabilities, and then owners equity. This financial statement is called a balance sheet because the following formula must always be in balance:
Assets = Liabilities + Owner's Equity |
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