Definition ∞ A balance sheet is a financial statement that reports a company’s assets, liabilities, and equity at a specific point in time. It provides a snapshot of what an entity owns, what it owes, and the net worth of the owners. This statement adheres to the fundamental accounting equation assets equal liabilities plus equity.
Context ∞ In the digital asset space, the concept of a balance sheet is becoming increasingly relevant for exchanges, custodians, and even decentralized autonomous organizations (DAOs). News often scrutinizes the financial health of crypto entities by examining their reported assets, such as holdings in various cryptocurrencies or fiat reserves, against their liabilities, including customer deposits or outstanding debts. Understanding a balance sheet’s components is key to assessing an entity’s solvency and operational stability.
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