What is a balance sheet, and what are its components?

A balance sheet is a financial statement that shows a company's financial position at a specific point in time. It is divided into three main components: 1. Assets: Resources owned by the company, which are further categorized into current assets (e.g., cash, inventory) and non-current assets (e.g., property, equipment). 2. Liabilities: Obligations the company owes to external parties, split into current liabilities (e.g., accounts payable) and non-current liabilities (e.g., long-term debt). 3. Equity: The residual interest in assets after liabilities are deducted, representing the owners' stake in the company, such as shareholders' equity or retained earnings.