Balance sheet

The financial statement of what a company owns and what it owes at a particular date, known as the statement of financial position in the United States. Traditionally, the left-hand side of the balance sheet is a schedule of the company's assets (land, buildings, plant and equipment, cash and inventories); the right-hand side is a statement of the liabilities, either real or potential. Real liabilities comprise the debts the company must pay - that is, creditors - plus its loans. Potential liabilities are the allowances that are likely to be paid: deferred taxes and, increasingly, post-retirement benefits for employees. The remaining item on the right-hand side is the shareholders' interest in the business. This is technically not a liability at all, but a statement of the risk capital subscribed to the business adjusted by the aggregate of retained earnings and (possibly) revaluation of some assets.