What is a Balance Sheet? Explained using the analogy of the lemonade stand.
 What is a balance sheet?
Basically, a balance sheet is like a snapshot of what you have, what you owe, and what's left for you.
Imagine you have a lemonade stand. What you have are some lemons, some money you have made from selling lemonade, some cups, a pitcher and the stand itself. These are called assets, which is what you have at your lemonade business.
However, some of these things are actually borrowed from others. You borrowed some money from your mom to buy the lemons and cups and you borrowed the pitcher from your dad. These are called liabilities, which are things you owe and promised to return to others.
If we take away your liabilities, as you will have to return them one day, what is left in the lemonade stand would be the stand itself, the cups, the lemons and the remaining money. These things are your Equity, which is what you truly own.
If we put all of these on a sheet of paper, with your assets on the left and your liabilities and equity on your right, we have a balance sheet! As you can see, what is on the left should always be equal to what is on the right.
This allows us to write an equation: assets equal liabilities plus equity. This is the famous accounting equation. However, I think a more straightforward way to think about this is to switch things around and say, assets minus liabilities equals equity. Which essentially means what you have, minus what you owe, is what is left for you. If you think this was helpful, please subscribe.