What is a balance (financial term)?

"Balance Sheet" is a snapshot of the value of the assets (possessions and business resources) and liabilities (the capital, consisting of equity and debts, or rather, external capital) of the enterprise.

The asset side (debit side) of the balance sheet lists the possessions and claims of the enterprise. The liability side (credit side) shows how these assets have been financed, with an overview of the equity and the external capital.

The balance sheet provides insight into a company's financial health at a specific moment and is essential for understanding the capital position, so that well-considered financial decisions can be made.