Balance sheet is one of the important financial statements which a joint stock company has to prepare at the end of every financial year. It is a summarized report of assets, liabilities and shareholders’s funds of a company. The balance sheet is used to access the current position of a company.
It is mandatory for every public (limited) company in India to disclose its balance sheet to general public but not for private companies to do so.
A balance sheet has two sides – Liability and asset.
On the left hand side i.e. liability side, a company lists all of its liabilities including share capital, reserve and surplus, secured & unsecured loans and current liabilities & provisions.
On the right hand side i.e. asset side, a company lists all of its assets including fixed assets, investments, current assets, loan & advances and miscellaneous expenditures.
Format of a horizontal balance sheet:
Balance sheet of XYZ Ltd.
As on 31/03/20..
Liabilities | Figure for the current year (Rs.) | Assets | Figure for the current year (Rs.) |
Share Capital:Authorized … shares of Rs … each Preference Equity Less: Calls unpaid Add: Forfeited shares | Fixed Assets:Goodwill Land & Building Leasehold premises Railway sidings Plant and machinery Furniture Patents and trademark Live stock Vehicles | ||
Reserve and Surplus:Capital reserve Capital redemption reserve Securities premium Other reserves P&L A/c | Investments:Government or trust securities, shares, debentures, bonds etc. | ||
Secured Loans:Debentures Loans and advances from banks Loan and advances from subsidiaries Other loan and advances | Current Assets, Loans and Advances:Current Assets:Cash and bank balance Accrued interest Stores and spare parts Loose tools Stock in trade WIP Accounts receivable Loans and Advances: Advances and loans to subsidiaries Bills receivables Advance payments and unexpired discounts | ||
Unsecured Loans:Fixed deposits Loan and advances from subsidiaries Short term loans and advances Other loans and advances | Miscellaneous – Expenditure:Preliminary expenses Discount on issue of shares Other deferred expenses | ||
Current Liabilities and Provisions:Current Liabilities:Accounts payable Accrued expenses Short term notes Current portion of long term notes Provisions:For taxation For dividends For contingencies For PF Schemes For insurance, pension and other such benefits | P & L A/c (debit balance: If any) | ||
| Total | Total |
It should be noted that the “total” of both the sides always remains equal.
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