The balance sheet represents the financial position of your business. It is written as an accounting equation: Assets minus Liabilities equals Owners Equity
- The "cash in the bank" and "machinery" are the assets.
- The "loan" with the bank is the liability.
- The difference between the two is your equity.
The balance sheet doesn't start over. It is the cumulative score from day one of the business to the time the report is created.