What is a Balance Sheet?

What is a Balance Sheet?

Balance Sheet

This is the Association’s financial position as of a date in time. That date is generally the end of a month and/or year. There is a basic “rule” with regards to balance sheets (and, hence, their name):

Assets = Liabilities + Equity
Assets – Liabilities = Equity

Let’s define each of these three categories and give examples of the most common accounts within the categories.


This is what the Association OWNS.

The most common assets are:
Cash & Investments
Assessments Receivable (A/R) – Monies owed to the Association from homeowners.

Question….what asset is NOT on the books???? The buildings and common property! If it was, you would be much more impressed with the size of corporation you were directing or managing!


This is what the Association OWES.

The most common liabilities are:
Prepaid assessments – Monies paid by members before they are due.
Payables – Monies owed for various reasons.
Refundable deposits – Monies being held by the Association to be returned.


This is the NET WORTH of the Association. It is often called Members’ Equity, Operating Fund, or Retained Earnings.

There actually are two types of equity/fund balances in an association: