The purpose of managerial accounting is to assess the financial position of an organization and accordingly engage in future financial planning. It has an internal focus and deals with planning, implementation, and control of internal financial matters of the organization. The balance sheet portrays the precise financial position of an organization at a particular point of time. It contains details about all the organizational expenditures and income. The balance sheet consists of four financial components viz. assets, liabilities, and owner?s equity. The accounting equation states that the total organizational assets are equal to the sum of liabilities and owner?s equity. The paper examines these issues.