Accounting, a methodical process of recording, classifying, summarizing, and interpreting financial activities, is essential for understanding a company’s financial health. A balance sheet, a fundamental financial statement, provides a detailed snapshot of a company’s assets, liabilities, and equity at a specific point in time.
Calculating the balance sheet is crucial for stakeholders to assess a company’s financial stability, solvency, and liquidity. It enables comparisons over time and against industry benchmarks. Historically, the development of double-entry accounting in the Renaissance laid the foundation for modern balance sheet calculations.