Subject: Accountancy
The balance sheet is a statement of assets, capital, and liabilities of the business. It is the statement, which depicts the financial position of the business on a particular date. It is not an account rather a financial statement. It presents the liability on the left-hand side and the assets on its right-hand side either in order of permanence or order of liquidity.
The following are the main definitions of the balance sheet: -
“Balance sheet is a statement of a particular date showing on one side the trader’s property and on the other side, the liabilities.” – Palmer
“Balance sheet is a list of balances in the assets and liabilities accounts. The list depicts the position of assets and liabilities of a specific business at a specific point of time.” – AICPA
“Balance sheet is a mirror, which reflect the true position of assets and liabilities of a business on a particular date,” – O. P. Gupta
The main objectives of balance sheet are as follows: -
The followings are the main advantages and importance of balance sheet: -
The balance sheet is prepared after preparing the profit and loss account. It is prepared at the last day of the accounting period. The specimen of balance sheet is as follows: -
What is balance sheet? What are the objectives of the balance sheet?
The balance sheet is a statement of assets, capital, and liabilities of the business. It is the statement, which depicts the financial position of the business on a particular date.
The balance sheet is one of the important statements for every business organization. It provides information about assets and liabilities to different interested parties like investors, lenders, bankers, creditors, government, and shareholders. The main objectives of balance sheet are as follows: -
What are the advantages of the balance sheet?
The following are the main advantages and importance of balance sheet: -
Define balance sheet.
The balance sheet is a statement of assets, capital, and liabilities of the business. It is not an account rather a financial statement. It presents the liability on the left-hand side and the assets on its right-hand side either in order of permanence or order of liquidity.
According to Palmer,“Balance sheet is a statement of a particular date showing on one side the trader’s property and on the other side, the liabilities.”
According toO. P. Gupta,“Balance sheet is a mirror, which reflect the true position of assets and liabilities of a business on a particular date.”
From the above definition, it is clear that balance sheetis the statement, which depicts the financial position of the business on a particular date. It provides information about assets and liabilities to different interested parties like investors, lenders, bankers, creditors, government, and shareholders.
What is balance sheet?
The balance sheet is a statement of assets, capital, and liabilities of the business. It is the statement, which depicts the financial position of the business on a particular date.
State any two objectives of the balance sheet.
The following are the main objectives of balance sheet:
State any two advantages of preparing balance sheet
The following are the main advantages of balance sheet:
From the following particulars of Sarala Traders, prepare balance sheet on 31st Chaitra:
Particulars |
Amt (Rs) |
Particulars |
Amt (Rs) |
Capital |
10,40,000 |
Net loss |
80,000 |
Outstanding wages |
72,000 |
Reserve fund |
68,000 |
Machine |
6,80,000 |
Furniture |
3,25,000 |
Goodwill |
37,000 |
Prepaid expenses |
58,000 |
Required: Balance Sheet
Solution:
Balance Sheet of Suruchi Traders For the year ended 31st Chaitra |
Liabilities | Amt (Rs.) | Assets | Amt (Rs.) | |
Capital | 10,40,000 | Machine | 6,80,000 | |
Less: Net loss | 80,000 | 9,60,000 | Goodwill | 37,000 |
Outstanding wages Reserve fund | 72,000 68,000 | Furniture Prepaid expenses | 3,25,000 58,000 | |
11,00,000 | 11,00,000 |
From the following particulars of Suruchi Traders, prepare balance sheet on 31st Chaitra:
Particulars |
Amt (Rs) |
Particulars |
Amt (Rs) |
Capital |
3,00,000 |
Net profit |
16,000 |
Debtors |
25,000 |
Reserve fund |
9,000 |
Drawing |
50,000 |
Furniture |
2,00,000 |
Bank overdraft |
5,000 |
Prepaid expenses |
55,000 |
Required: Balance Sheet
Solution:
Balance Sheet of Suruchi Traders For the year ended 31st Chaitra |
Liabilities | Amt (Rs.) | Assets | Amt (Rs.) | |
Capital Add: Net profit Less: Drawing | 3,00,000 16,000 3,16,000 50,000 | 2,66,000 | Furniture Prepaid expenses Debtors | 2,00,000 55,000 25,000 |
Reserve fund Bank overdraft | 9,000 5,000 | |||
11,00,000 | 11,00,000 |
From the following particulars of Sarala Traders, prepare balance sheet on 31st Chaitra:
Particulars |
Amt (Rs) |
Particulars |
Amt (Rs) |
Capital |
10,40,000 |
Net loss |
80,000 |
Outstanding wages |
72,000 |
Reserve fund |
68,000 |
Machine |
6,80,000 |
Furniture |
3,25,000 |
Goodwill |
37,000 |
Prepaid expenses |
58,000 |
Required: Balance Sheet
Solution:
Balance Sheet of Sarala Traders For the year ended 31st Chaitra |
Liabilities | Amt (Rs.) | Assets | Amt (Rs.) | |
Capital | 10,40,000 | Machine | 6,80,000 | |
Less: Net loss | 80,000 | 9,60,000 | Goodwill | 37,000 |
Outstanding wages Reserve fund | 72,000 68,000 | Furniture Prepaid expenses | 3,25,000 58,000 | |
11,00,000 | 11,00,000 |
© 2019-20 Kullabs. All Rights Reserved.