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Accounting
Off-Balance-Sheet
Assets or liabilities that do not appear on the main balance sheet, often because they are in special companies or structures.
Off-balance-sheet items include leases, joint ventures, and special purpose vehicles. Accounting rules now require more of them to be brought onto the balance sheet for transparency, but some still remain hidden.
It's like hiding debt in a separate cupboard so visitors don't see the full mess in the main room.
Real world: Before 2008 many banks kept risky loans in off-balance-sheet vehicles. When those vehicles failed, the losses still came back to the banks, surprising everyone.
💡 Off-balance-sheet items can hide big risks — always read the notes carefully.