The balance sheet presents the financial position of an organization at the end of a specific date. Its purpose is to help predict amounts, timing, and uncertainty of future cash flows. However, the balance sheet does not represent the current value of many accounts on the financial statement because when it is prepared, assets are stated at its original cost not at its current market value. With the exception of receivables and investment securities, no current values are shown. In all, a balance sheet is a representation of: property (legal rights), assets (liabilities and shareholders equity), and investing (financing).

Learn more about finances from Bart Basi in TH105 Financial Statements—Don’t Let Their Complexity Scare You.