balance sheet

A snapshot at one date of what the company has (assets) and how it is financed (liabilities and equity). The two sides are always equal.

A balance sheet is a snapshot of a company on one date: what it has (assets) and how that is financed (liabilities and equity). Assets include cash, money customers owe (receivables), equipment net of depreciation and anything paid in advance. Liabilities are what the company owes others: bills from suppliers and providers (payables), service customers prepaid (deferred revenue), loans. Equity is what belongs to the owners: the money they put in plus the profits kept in the business.

The two sides are always equal: assets = liabilities + equity. Every transaction touches at least two lines. A prepayment raises cash and deferred revenue; a delivered lesson lowers deferred revenue and raises equity through profit; a laptop bought for cash swaps one asset for another.

The balance sheet ties the three statements together. The period's profit flows into equity, and the closing cash on the balance sheet is where the cash flow statement ends. For product people its most useful lines are the ones about timing: how much customers have prepaid, how much they still owe and how much the company owes its providers. A large cash balance can be mostly money that is already spoken for.

Example

Selected lines from Klasna's balance sheet on 30 November 2026, in UAH:

	Line	UAH
Asset	Teams invoice, not yet paid	640,000
Asset	Laptops: 432,000 bought in August − 3 × 18,000 depreciation	378,000
Liability	Tutor payouts for 16–30 November, due 5 December	1,918,370
Liability	November video, AI and Club hosts, paid in December	375,930
Liability	Prepaid lessons not yet taken	6,180,000
Liability	Club annual plans, months still owed	343,800

These liabilities add up to 1,918,370 + 375,930 + 6,180,000 + 343,800 = 8,818,100. Most of it is lessons and service Klasna still has to deliver. Whatever the bank shows that day, a large part of it is families' money until their lessons happen.

Common mistakes

Reading cash without the liabilities next to it. Prepaid service and payouts due are claims on that cash.
Expecting it to show performance. It's a snapshot of one date; profit over a period is on the P&L.
Forgetting that dates matter. A balance sheet on the last day of a quarter can look very different from one a week later.
Treating negative working capital as distress. For a prepaid business it often means customers fund the company.

Learn it in the course

The cash flow statement and the three financial statements · How the three financial statements link, with a cash flow statement example: operating, investing and financing cash, built from profit with the indirect method.
Case: a board report for a new board member · A board report on the quarter: rebuild Klasna's autumn P&L from raw lines, separate what will repeat from what won't, and back the memo with numbers.