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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.
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 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.
     
 
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 0isclosure 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.

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 It shows the historical cost rather actual cost.
 Fictitious, unrealizable assets like ³Unwritten 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.
 

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i) Tangible Assets: Building, Machinery, Plant, Furniture etc.
ii) Intangible Asset: Goodwill, Patent, Copyright, Trade Marks
etc.

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i) Liquid Asset: Cash, Securities etc.
ii) Circulating Asset: Trade 0ebtors, Bills Receivable, Stocks,
etc.
iii) Intangible Asset: e.g. Prepaid Expenses, Outstanding
Incomes etc.
Continued«.
 è 


i) Unrealizable Assets: like preliminary expenses


ii) Contingent Asset: e.g. damage receivable where the
suit is pending etc,. a claim for Income Tax Refund.
Continued«.
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i) Fixed Liability: long term loan, debenture.
ii) Current Liability: Sundry Creditors, Bills Payable, and
Outstanding Expenses.
iii) Liquid Liabilities
iv) Contingent Liability: Bills discounted but not matured,
0amages payable still under dispute, etc.
v) Internal Liability: Profit & Loss A/c, Reserve, etc.
vi) External Liability: Bills Payable, Trade Creditor, etc.
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 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
SCHE0ULE VI
 
Fixed Assets
Investments
Current Assets, Loans and Advances
Miscellaneous Expenditure
Profit & Loss Account
V ti.
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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 P0F File««..
THANK YOU