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A balance sheet (Statement of Financial Position) is a financial statement that shows what a business owns (assets), what it owes (liabilities), and the owner's investment (equity) at a specific point in time. The fundamental equation is: Assets = Liabilities + Equity.

Current assets can be converted to cash within 12 months (cash, receivables, inventory). Non-current assets are long-term (property, equipment, intangible assets). Similarly, current liabilities are due within 12 months, while non-current liabilities are long-term debts.

At minimum, annually for statutory compliance. However, monthly or quarterly balance sheets help track financial health, secure loans, attract investors, and make informed business decisions.

A balance sheet shows financial position at a point in time (snapshot). A P&L (Profit & Loss) statement shows financial performance over a period (movie). Together, they give a complete picture of business health.