> ## Documentation Index
> Fetch the complete documentation index at: https://docs.lynkacrm.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Balance Sheet: understand what the business owns and owes

> Learn how the Lynka Balance Sheet presents assets, liabilities, equity, and current-period earnings, and how to investigate a balance that does not look right.

The **Balance Sheet** shows the financial position of the business at a point in time.

Its core relationship is:

**Assets = Liabilities + Equity**

Lynka's accounting model should reconcile that equation when posted books and account classifications are correct.

## Assets

Assets represent resources controlled by the business, such as cash, bank balances, receivables, inventory, and other asset accounts configured in the chart.

An asset balance does not automatically mean the same amount is available cash. Accounts Receivable and Inventory are assets too, but they are not money sitting in the bank.

## Liabilities

Liabilities represent obligations, including supplier payables, tax payable, and other amounts the business owes.

A Purchase Order by itself is not necessarily an Accounts Payable balance. Payables should come from the supplier billing and accounting workflow that creates an actual obligation.

## Equity

Equity represents the owners' residual interest after liabilities. Current-period earnings can be part of the equity bridge even when the business has not yet posted a separate year-end transfer into a retained earnings account.

## Why the report is a point-in-time view

If you run the Balance Sheet for the end of June, it describes the position at that date. Profit & Loss for June describes activity during the month.

That difference explains why Balance Sheet accounts carry forward while revenue and expense reporting is period-based.

## Common reconciliation checks

Review:

* cash and bank balances against reconciliation
* Accounts Receivable against posted customer invoices less valid settlement
* Accounts Payable against supplier obligations and payments
* Inventory against the operational valuation basis when both sides use the same scope
* tax payable against posted taxable activity
* the overall accounting equation

## If the Balance Sheet does not balance

Do not add a balancing adjustment simply to make the equation look correct.

Start with the Trial Balance and posted Journal integrity. Then investigate account classification and any historical corrections.

## If the Balance Sheet balances but a number looks wrong

A balanced statement can still contain misclassification. Open the General Ledger for the suspicious account and trace the entries.

For example, cash can be too high if a payment was recorded to the wrong bank account, even while the entire Balance Sheet still balances.

## Use it with P\&L and Cash Flow

The Balance Sheet tells you position. Profit & Loss tells you performance. Cash Flow explains how cash changed.

An owner should use all three rather than asking one report to answer every finance question.