When machinery that was previously purchased on credit is paid for, both liabilities and assets on the balance sheet increase by the same amount.
A balance sheet, also referred to as a statement of financial position or a statement of financial condition in financial accounting, is an overview of the financial standing of an individual or organization, including a sole proprietorship, a business partnership, a corporation, a private limited company, or other entities like the government or not-for-profit organizations.
A balance sheet is frequently referred to as a "snapshot of a company's financial condition". Of the four fundamental financial statements, the balance sheet is the only one that only relates to a certain moment in a company's fiscal year.
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