There are four basic financial statements. We can think of them as a set. They include the balance sheet, the statement of revenue and expenses, the statement of net worth, and the statement of cash flows. The four reports fit together; each makes its own contribution to the whole.
Balance Sheet The balance sheet records what an organization owns, what it owes, and basically, what it is worth. The balance sheet balances. That is the total of what the organization owns its assets equals the combined total of what the organization owes and what it is worth that is its liabilities and its net worth or its fund balance. This balancing of the elements in the balance sheet can be visualized as Assets = Liabilities + Net Worth
Another characteristic of the balance sheet is that it is stated at a particular point in time, it freezes the figures and reports them as of a certain date. The following exhibit presents the balance sheet.