The operating statement holds perhaps the most important single piece of information about a business - its net income, revenues minus expenses. If expenses exceed revenues, a net loss results for the period. The balance sheet describes the condition of your business on a particular day, usually the last day of the month, quarter, or year. This makes it different from other financial statements, most of which cover a period of time. Another difference between the balance sheet and other statements is that it must balance the assets to the liabilities and owner's equity of the business.
Assets are anything the business owns that has monetary value.
The assets of a small business commonly include cash, notes receivable, accounts receivable, inventories, land, buildings, machinery, equipment and other investments or intangible assets. Liabilities are the claims of creditors against the assets of the business - in other words, debts owed by the business. Owner's equity consists of the assets of a business minus its liabilities. Every business must file an annual income tax return. Which form businesses use depends on how they are organized.