A balance sheet shows the value of a business on a particular date. A balance sheet shows what the business owns and owes (its assets and its liabilities).
e.g.
Fixed assets £150,000 Current assets £25,000 Current liabilities £100,000 Net assets employed £75,000 Capital and reserves £75,000
This balance sheet shows that the business has total assets of £175,000, owning £150,000 in fixed assets and £25,000 of cash or near-cash available to the firm. Then by taking away the liabilities, which are the things that the business owes to other businesses or individuals, this gives the value of this business on this day, £75,000.
Fixed assets - you keep this type of asset long term, e.g. shops, vehicles - create revenues & enable it to earn profits.
Current assets - short term (less than 1 year), cash, stocks of raw materials, used to settle debts (pay for raw materials).
Total equity - Part of company that belongs to shareholders (value of ownership). if the business stops trading it can sell its fixed and current assets, they usually have to pay its liabilities (debts).
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