Meaning of Balance Sheet:- Balance Sheet involves liability and assets which all are equal in all terms. Both sides of the Balance sheet must be Tally liability to assets.
In Other words:- Balance sheet reflects two sides as debit or credit. Debit side shows Liabilities as well as credit side shows Assets.
Capital + Liabilities = Assets
| Liabilities | Amt. | Assets | Amt. |
| Current Liabilities Outstanding Exp. Bills Payable Bank Overdraft Sundry Creditors Short term Loans & Advances Unearned Income | ₹ XXX XXX XXX XXX XXX XXX | Current Assets Cash in Hand Cash at Bank Bills Receivable Trade Debtors Closing Stock:(i) Raw Material (ii)Work in Progress (iii)Finished Goods Prepaid Expenses Accrued Income | ₹ XXX XXX XXX XXX XXXXXXXXX XXX XXX |
| Fixed Liabilities Long Term Loans Public Deposits | ₹ XXX XXX | Fixed Assets Loose Tools Furniture Motor Vehicles Plant and Machinery | XXX XXX XXX XXX XXX |
| Capital Add Net Profit ( or Less Net Loss ) Less Drawing | XXX XXX XXX | Patents and TradeMarks Goodwill Fictitious Assets | XXX XXX XXX |
Assets in the Balance Sheet may be Classified as following.
- Fixed Assets:- These types of assets are of a permanent nature. Which are used in the operations of business and not intended for sale. As per this definition these assets are like Building, Furniture, Plant, Machinery, office, Fixtures and Patents. So investment held for a long period is treated as Fixed Assets.
- Intangible Assets:- These types of assets cannot be seen or touched but in the accounting language it has some values. These assets are as Goodwill, Patents, TradeMarks and Copyrights etc.
- Current Assets:- Current assets are those assets which are convertible into cash generally in one year. So its some examples: Cash in hand, Cash at Bank Temporary investment, Trade Creditors, bills receivable and Store. So advance payment is known as Current Assets.
- Fictitious Assets:- These are assets which are not represented by Possession and Property. These are types of Expenditure of an unusual nature. Which could not be written off, as Preliminary Expenses, Research and Development Expenditure, heavy Advertisements, Debit balance of Profit and Loss account are Examples of such assets.
Types of Liabilities
Liabilities are a payable amount. Which is paid compulsory to another person in the future. Balance sheet format
- Fixed and Long Term Liabilities:- Fixed Liabilities are those liabilities which are paid on the time of business termination of the business. So such liabilities are not paid in the next accounting period. Long term Loans, Debentures are the example of such Liabilities.
- Current Liabilities:- These types of liability are paid out of current assets. Thus, this type of liabilities are payable in the next accounting period. This involves Creditors, Bank overdraft, Bills Payables, Outstanding Expense, Tax Payables and advanced Received.
- Contingent Liabilities:- This liability depends upon the happening of certain events. If such events are not incurred correspondingly, liability is not incurred. Example: a clai the business Unit.
Conclusion:- Now anyone can understand the format of the balance sheet by considering all mentioned individual terms. Just you need to consider all items included in this balance sheet format.
You can Consider other important format as following. Balance sheet format
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