Prepare the format of balance sheet and explain the various elements of balance sheet.
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Vertical Form of Balance Sheet
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Particulars |
Schedule No. |
Figure for the Current Year |
Figure for the Previous Year |
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I. Sources of Funds |
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(1) Shareholder’s Funds |
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(a) Capital |
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(b) Reserve and Surplus |
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(2) Loan Funds |
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(a) Secured Loan |
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(b) Unsecured Loans |
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II. Application of Funds |
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(1) Fixed Assets |
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(a) Gross Block |
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(b) Less: Depreciation |
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(c) Net Block |
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(d) Capital Work in Progress |
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(2) Investments |
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(3) Current Assets, Loans and Advances |
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(a) Inventories |
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(b) Sundry Debtors |
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(c) Cash and Bank Balance |
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(d) Loan and Advances |
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(e) Other Current Assets |
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Less: Current Liabilities and Provisions |
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(i) Liabilities |
– |
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(ii) Provisions |
– |
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Net Current Assets |
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(4) (a) Miscellaneous Expenditures (to the extent not written off) |
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(b) Profit and Loss Account |
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Dr. Balance (Loss) |
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Total |
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Elements of Balance Sheet
1. Share Capital: It is the first item on the Liabilities side. It consists of the following items:
a) Authorised Capital
b) Issued Capital: Equity share and preference share.
c) Subscribed Capital less Call in Arrears add Forfeited Shares
2. Reserve and Surplus: As per the Schedule VI, it consists of the following items:
a) Capital Reserve
b) Capital Redemption Reserve
c) Security Premium
d) Other Reserve less Debit balance of P & L A/c
e) Surplus: Credit balance of P & L A/c
f) Proposed Additions
g) Sinking Fund
3. Secured Loans
a) Debentures
b) Loan and advances from bank etc.
4. Unsecured Loans
a) Fixed Deposits
b) Loan & Advances from subsidiaries
5. Fixed Assets: These are those assets that are used for more than one year, like:
a) Goodwill
b) Land
c) Building
d) Plant & Machinery
e) Patents, Trade Marks
f) Livestock
g) Vehicles, etc.
6. Current Assets: Assets that can be easily converted into cash or cash equivalents are termed as current assets. These are required to run day to day business activities; for example, cash, debtors, stock, etc.
7. Current Liabilities: Those liabilities that are incurred with an intention to be paid or are payable within a year; for example, bank overdraft creditors, bills payable, outstanding wages, short-term loans, etc are called current liabilities.