A balance sheet is a financial snapshot of the value of the assets owned by a company and the liabilities owed by a company at a point in time. The basic equation reflected in a balance sheet is:
Another way of stating the equation is to say that the value of the shareholders’ investment in a company is equal to the current value of company assets less the total amount of money owed by the company through debt or other obligations.
Here is an example of a simple balance sheet:
For regulatory purposes, most utilities in the U.S. follow accounting requirements set by the Uniform System of Accounts (USOA). The USOA, which is prescribed by FERC, comprises accounting standards that are used to provide uniformity and consistency in the reporting of utility financial information. These standards have been adopted by most state regulators and are gaining widespread support around the world.