Reading the Balance Sheet

Assets = Liabilities + Equity

Go to Accounting > Reporting > Balance Sheet. This report is always "as of" a single date, not a period — it shows what the business owns, owes, and is worth at that instant.

Assets

• Current Assets – Bank and Cash Accounts, Receivables, other Current Assets, Prepayments.
• Fixed Assets – Equipment, property, and similar (see the Fixed Assets course for the depreciation side).
• Non-current Assets – Long-term assets not classified as fixed.

Liabilities

• Current Liabilities – Payables and other short-term obligations.
• Non-current Liabilities – Long-term loans and obligations.

Equity: Retained Earnings & Net Income

The Equity section has exactly two top-level lines:

• Retained Earnings – every prior fiscal year's earnings rolled up, plus your real equity accounts (Share Capital, Reserves, Owner's Drawings, etc.). Click to expand and see each contributing account.
• Net Income (Current Year) – this fiscal year's profit or loss to date, computed live from the Profit and Loss report — not a number you ever have to manually close or post a journal entry for. It automatically becomes part of Retained Earnings once the new fiscal year starts.

Because Net Income is computed dynamically rather than posted via a year-end closing entry, the split between "this year" and "prior years" depends entirely on your Fiscal Year setting (previous article) being correct — this is the single most common cause of a Balance Sheet that doesn't balance or a "Net Income" figure that looks too large or too small.

Verifying It Balances

The report itself shows ASSETS and LIABILITIES + EQUITY as two separate totals — they must always be equal. If they aren't, check the fiscal year setting first, then look for a manual journal entry that posted directly against an equity account in an unusual way.

Off Balance Sheet Accounts

A final section lists accounts that don't belong in the main equation (e.g. guarantees, commitments) — shown separately and only when non-zero, so they're visible without distorting the core Assets/Liabilities/Equity totals.