Understanding Balance Sheet

27 Responses to Understanding Balance Sheet

1. PARSHURAM | July 9, 2009 at 12:36 pm | Reply

   i want format of profit & loss account and balance sheet.

   Reply by Anup: The format of the B/S as per Companies Act 1956 is already present in the article. For other details please checkout the Companies Act 1956. And if you are looking for just simple format of P/L and B/s – then please consult some basic book of accountancy.

2. Pratik | November 28, 2009 at 11:20 pm | Reply

   Thanks for sharing your knowledge.

3. Ravi | December 17, 2009 at 11:09 pm | Reply

   Suppose a company has a long term debt of 10 lacs of which 1 lac should be paid in current year. In this case, Is that 1 lac added in current liabilities? If yes, where is the remaining 9 lacs shown?

   • Anup Mukherjee | December 18, 2009 at 4:26 am | Reply

     Long Term Debt of 10 lakhs shall be shown under Loan Funds classified as Secured or Unsecured depending on nature of borrowing. It is not Current Liability even if part of it is payable in current year.

4. Ravi | December 18, 2009 at 12:11 pm | Reply

   Thanks for the reply. I have one more question.. What about the reserves and surplus account. Is it only the “initial equity + retained earnings”?

   • Anup Mukherjee | December 18, 2009 at 5:31 pm | Reply

     The head of equity is “Capital A/c” – it does not come under Reserve and Surplus.

     “Reserve and Surplus” can be of various kind. Usually, it is the retained earning after payment of taxes, that is credited to this head. But it is not just limited to that. It can also contain, items of non-cash and non-distributable nature like “Capital Reserve” or “Revaluation Reserve”.

     For entities other than companies like Proprietorship or Partnership – accounting can be more flexible by crediting the surplus to the Capital A/c directly without going through the route of making separate Reserve and Surplus accounts.

     There is one more thing – that in case of companies – earlier the companies had to follow the Companies Act in case of Foreign Exchange Assets – where the fluctuation could have been adjusted with items of B/S or even a Forex Fluctuation Reserve could have been created. However as per Companies (Accounting Standards) Rules and AS 11, it is no more possible to adjust the forex fluctuations with B/S items or with such reserve in B/S. Now such fluctuations have to be adjusted through a Dr or Cr in P/L account.

5. Rajib Dutta | May 7, 2010 at 9:57 am | Reply

   Sir,

   Pls. sent me a format of cash flow as shown in the Final Accounts.

   Best Regards
   Rajib Dutta

   • Anup Mukherjee | May 7, 2010 at 5:54 pm | Reply

     You are adviced to consult AS 3 (on Cash Flow) issued by ICAI

6. Ajay Tiwari | February 16, 2011 at 6:09 pm | Reply

   Want to understnad the the BALANCE SHEET.

7. Girija Sankar Behera | February 17, 2011 at 9:50 am | Reply

   Please send me this aritcle.

   • Anup Mukherjee | February 17, 2011 at 10:40 am | Reply

     Why dont you download pdf of the article?

     http://indiapoint.net/ca/2005/11/14/understanding-balance-sheet/#_pdf

8. Aman Bansal | August 11, 2011 at 12:01 am | Reply

   Nice information for ca students thanks

   • Anup Mukherjee | August 11, 2011 at 12:11 am | Reply

     This article I wrote long back. While the basic principles are same, but the Format of Schedule VI has undergone tremendous change. The changes have been implemented from the FY beginning 01.04.2011

     So the Schedule VI format given in the article is the old one (applicable upto 31.03.2011)

9. Rakesh yadav | August 18, 2011 at 7:52 am | Reply

   i am satisfied with all information . please you clear that where show profit in p&l a/c and balance sheet.

   • Anup Mukherjee | August 18, 2011 at 9:24 am | Reply

     In P/L profit is the balancing figure on the Dr side. In B/S, Profit is part of Liabilities.

10. santosh kumar gupta | September 1, 2011 at 8:24 pm | Reply

    well it is a good web site