The purpose of a balance sheet is to show what a company owns and owes as of a specific date. Income statements are prepared “for the period ending” and balance sheets are prepared “as at” a certain date.
The balance sheet summarizes what the business owns and compares it to what the business owes. It does so in a standard format to make it easy to see what kind of financial shape the business is in. If a business has more assets than liabilities, that’s a good sign. On the other hand, if a company has more liabilities than assets, it might be a sign of trouble.