All items (assets and liabilities) that are not reported on the statement of financial position (balance sheet) of an entity. Typically, these items are classified off balance sheet because an entity has no control over them- that is, it is not the legal owner of such items. In financial reporting, these items are shown in the notes to financial statements (footnotes). However, the entity may use off-balance sheet items (usually on behalf of their legal owners). Off-balance sheet items are common in asset management, brokerage, wealth management, etc., where the assets being managed do not belong to management firms but rather to their clients.

Examples of such items include operating lease, sale of receivables under specific conditions, guarantees (for letters of credit), etc.

Off-balance sheet techniques are often used as part of the universe of creative accounting (e.g., window dressing) to improve accounting ratios or budge a debt level ceiling (e.g., debt-to-equity ratio) imposed by lenders, limiting its lending potential. An example of real life situation is a firm seeking to raise a loan, and its lender set a condition that its debt-to-equity ratio shall not be allowed to increase over the loan term. If during this term, the firm needs to borrow more (to buy certain assets), it may set up a special purpose vehicle (SPV), which by nature entails off-balance sheet accounting. The SPV will buy the assets and lease them out to the firm.