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BALANCE SHEET Concept: It is the final statement of the financial position of a business on the closing date of the financial period. The balances of the real accounts and personal accounts appearing in the Trial Balance are grouped as assets or liabilities on their nature of balances. These are arranged in the systematic manner and shown in the Balance Sheet after making necessary adjustments like depreciation, provision etc.

Features of Balance Sheet : 

Features of Balance Sheet It is a statement but not an account. It is a summary of unallocated balances. It acts as a buffer between the transactions of two consecutive accounting periods. It acts as a resource statement.

Purpose of preparation of a Balance Sheet : 

Purpose of preparation of a Balance Sheet Disclosure of values and natures of assets and liabilities. Information about solvency. Information about liquidity. Information about other necessary aspect. Provision of a yardstick of measurement.

Limitation of Balance Sheet : 

Limitation of Balance Sheet It shows the historical cost rather actual cost. Fictitious, unrealizable assets like “Unwritten off Expenses” also find place in the Balance Sheet. it fails to bring out important aspects like business trend, managerial efficiency, etc. A Balance Sheet fails to disclose human and efficiency of workers. Balance Sheet as an indicator of financial resources not a indicator of income generated during an accounting period.

Component of Balance Sheet : 

Component of Balance Sheet Fixed Assets Tangible Assets: Building, Machinery, Plant, Furniture etc. Intangible Asset: Goodwill, Patent, Copyright, Trade Marks etc. Current Assets Liquid Asset: Cash, Securities etc. Circulating Asset: Trade Debtors, Bills Receivable, Stocks, etc. Intangible Asset: e.g. Prepaid Expenses, Outstanding Incomes etc.

Continued…. : 

Continued…. Miscellaneous Unrealizable Assets: like preliminary expenses Contingent Asset: e.g. damage receivable where the suit is pending etc,. a claim for Income Tax Refund.

Continued…. : 

Continued…. Liabilities: Fixed Liability: long term loan, debenture. Current Liability: Sundry Creditors, Bills Payable, and Outstanding Expenses. Liquid Liabilities Contingent Liability: Bills discounted but not matured, Damages payable still under dispute, etc. Internal Liability: Profit & Loss A/c, Reserve, etc. vi) External Liability: Bills Payable, Trade Creditor, etc.


SCHEDULE VIAS PER COMPANIES ACT, 1956 Section 211 requires that every Balance Sheet of a company should provide a true and fair view of the state of a company as at the end of the financial year and it should be sent out in the format prescribed in Part I of Schedule VI of the Companies Act, 1956. The format of Balance Sheet as per schedule VI may of two types viz. i) Vertical Format and ii) Horizontal Format.


BALANCE SHEET AS PER SCHEDULE VI ASSETS Fixed Assets Investments Current Assets, Loans and Advances Miscellaneous Expenditure Profit & Loss Account

Continued…. : 

Continued…. LIABILITIES Share Capital Reserve & Surplus Secured Loan Unsecured Loan Current Liabilities & Provisions Contingent Liabilities


COMPANY BALANCE SHEET Balance Sheet of ITC Ltd. Will be discussed through PDF File……..

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