![]() ![]() Equity: the difference between assets and liabilities, or the true value of your business.Liabilities: what your business owes to other parties. ![]() Here are the components of a balance sheet: Balance sheet formulaĪ balance sheet reports your firm’s assets, liabilities, and equity as of a specific date. Learn more details about the elements of a balance sheet below. You’ll know if you need to use a debit or credit because the equation must stay in balance. The equation is comprised of assets (debits) which are offset by liabilities and equity (credits).
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