The balance sheet is a snapshot of a company's financial position at a specific moment in time. It follows the fundamental equation: Assets = Liabilities + Equity.
The left side lists everything the company owns (assets — cash, inventory, equipment). The right side shows what it owes (liabilities — loans, payables) and what belongs to the owners (equity — invested capital, retained earnings).
The balance sheet must always balance — hence the name. If a company has $1 million in assets, $600,000 in liabilities, and $400,000 in equity, the equation checks out: $1M = $600K + $400K.