Balance sheet

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A balance sheet is an impression of certain aspects of a business, at a specific moment in time.


When you partition a year into twelve months and you make end balances for those months and for the year as a whole, do these 12 monthly balances add up to the yearly balance?

I guess so, but let's check:


Booking facts: Every month, 1 invoice of € 1.000 (ex VAT) is send. It's paied immediately and VAT is settled the same month.

Balance at the beginning of the year: € 0 - € 0

Balance at the end of the first month:

  • Debit: Bank account: € 1.000
  • Credit: Equity = assets - liabilities = € 1.000.

Balance at the end of the second month:

  • Debit: Bank account: € 2.000
  • Credit: Equity = assets - liabilities = € 2.000.


Balance at the end of the 12th month:

  • Debit: Bank account: € 12.000
  • Credit: Equity = assets - liabilities = € 12.000.


Conclusion: It doesn't! The balance at the end of the year, is just that: An inventory of the state at that specific moment. Early balance sheets have no meaning in this context.

I guess I confused a point-in-time entity like balance sheet with an interval entity like income statements: There you can add partitions to arrive at the annual income.