Balance sheets are prepared to show the financial position of any company at a point of time. It has the summarized view of what a company owns, what it owes and the difference between the two. In simple words it presents the Asset and Liabilities of the company. It also shows how much a company has taken in terms of Debt, loan, Equity etc.
It has a specific format, where details of each and every Asset and Liabilities are shown in a particular manner. It is governed by Accounting Standards (AS) and regulations as per Schedule III of the Companies Act, 2013 and Indian Accounting standard (Ind AS) in India.
In the assets section of the balance sheet, you will find items of value that can be converted into cash. These items will be listed in order of liquidity, that is, how easily they can be converted to cash.
