1. ASIA PACIFIC INSTITUTE OF MANAGEMENT
STUDIES
SUBMITTED TO— SUBMITTED By—
PRETTI MAHESHWARI SECTION-H
GROUP-4
Debojit-66
Abhisek-03
Niraj-30
Sritanu-57
Krishnakant-25
Biswajit-12
2. CONTENTS:
UNDERSTANDING THE MEANING OF BALANCE
SHEET
FEATURES OF BALANCE SHEET
PURPOSE OF A BALANCE SHEET
LIMITATION OF BALANCE SHEET
COMPONENT OF BALANCE SHEET
BALANCE SHEET AS PER SCH.VI OF
COMPANIES ACT, 1956
BALANCE SHEET VERTICAL FORMAT:
SARAL SCHEDULE VI FOR THE SMALL AND
MEDIUM
3. BALANCE SHEET --- HORIZENTAL FORMAT
BALANCE SHEET
Concept:
The American Institute of Certified Public Accountants defines balance sheet
as “tabular statement of summary of balances (debits and credits) carried forward
after an actual and constructive closing of books of account and kept according to
the principles of accounting.” The purpose of balance sheet is to show the resources
that the company has, i.e. its assets, and from where those resources come from,
i.e. its liabilities and investments by owners and outsiders.
The balance sheet is one of the important statements depicting the financial
strength as well as the financial position on the closing date of the financial period of
the company. The balances of the real accounts and personal accounts appearing in
the Trial Balance are grouped as assets or liabilities on their nature of balances.
These are arranged in the systematic manner and shown in the Balance Sheet after
making necessary adjustments like depreciation, provision etc.
It is a statement not an account. Commonwealth countries like India follow
the format of a Balance Sheet as prescribed by the British Companies Act 1856. It
shows all liabilities and capital on the left hand side and all assets on the right hand
side of the statement. USA and Australia prepare their Balance Sheet in the opposite
manner.
The assets and liabilities are to be arranged in the Balance Sheet according to
a particular sequence or order. This is known as “Marshalling”. Such sequence may
be made under----
i) Liquidity Preference Method: The Balance Sheet starts with the most liquid
assets and liabilities and ends with least liquid assets and liabilities.
ii) Performance or Rigidity Preference Method: The least liquid assets and
liabilities are placed first and end with the most liquid assets and liabilities.
4. Under this both method investment are placed in between. Limited companies follow
the format of balance sheet as provide under Part I, Schedule VI of the Indian
Company Act 1956.
FEATURES OF BALANCE SHEET
i) It is a statement but not an account: No closing entry is required to transfer assets
or liabilities to the Balance Sheet. It shows the stock of assets and liabilities at a
particular date.
ii) It is a summary of unallocated balances: According to the matching cost concept,
the costs allocated to any accounting period are matched against corresponding
revenues. The left over portion of costs, that is, the unallocated portion is carried
forward to the next period as asset. Liabilities represent the sacrifices that
tantamount to the unallocated costs. So, the Balance Sheet contains unallocated
costs and corresponding sacrifices.
iii) It acts as a buffer between the transactions of two consecutive accounting
periods: According to the going concern concept a business is expected to continue
over an indefinite life span. The Balance Sheets are interim financial report with in
this span and build up the link or bridge between two accounting period.
iv) It acts as a resource statement: Smith & Keith observed that a Balance Sheet
shows the economic resources of the business at a point in time and the sources of
those resources at the point of time.
5. PURPOSE OF BALANCE SHEET:
Disclosure of values and natures of assets and liabilities: Assets and liabilities are
shown in the Balance Sheet following some systematic order. This gives an idea
about their natures – whether fixed or fluctuating or current or tangible, etc. The
value of these assets and liabilities are also made following some consistent
principles.
Information about solvency: The working capital position and the short run solvency
of a business can be easily assessed from its current assets and current liabilities. On
the other hand fixed assets and long term loans give an idea about the long run
prospect.
Information about liquidity: The Balance Sheets clearly exhibits the liquid assets and
the readily payable external debts. It creates a transparency regarding the liquidity
position.
Information about other necessary aspect: A Balance Sheet helps to know about the
capital employed, the nature of capitalization, the risk factor involved, the business
potential, trend of profitability, managerial efficiency and economic growth in a
business.
Provision of a yardstick of measurement: Accounting is, at present, considered as a
measurement discipline. By providing a measure of economic resources and
sacrifices on a particular date, a Balance Sheet serves as a yardstick of
measurement.
LIMITATION OF BALANCE SHEET:
6. The Balance Sheet usually shows fixed assets at depreciated values of their historical
costs, that is, the cost incurred at the time of their acquisition. But in a situation
where the price level becomes subject to frequent changes, the values depicted in
the Balance Sheet remain incorrect.
Fictitious, unrealizable and bogus assets like “Unwritten off Expenses” also find place
in the Balance Sheet which entirely goes against the value mechanism.
A Balance Sheet as a transactional statement of assets and liabilities becomes a
static statement of funds, it fails to bring out important aspects like business trend,
managerial efficiency, etc.
A Balance Sheet fails to disclose human and efficiency of workers. It ignores
qualitative aspects.
Balance Sheet as an indicator of financial resources, enjoyed central attention till the
1930s. Thereafter, income statement like profit & loss accounts enjoy more attention
as they can explain how and what amount of income have been generated during an
accounting period.
CONTENTS OF BALANCE SHEET
Asset:
It means a claim or right which will render future value to a business. Any
expenditure whose entire benefit has been utilized fully, from which further services
or opportunities will be received and which the business has got right and ownership
is called an asset. Asset may be broadly divided into (a) Fixed Asset – held by a
concern over years for re-use to earn income over years and (b) Current Asset –
expected to be realized or convert into cash or consumed during the normal
operating cycle of the accounting period.
Fixed Asset may be further sub-divided as-----
Tangible Asset: Whose existence can be seen and felt, e.g. Building, Machinery,
Plant, Furniture etc.
Intangible Asset: Whose existence remains invisible but whose benefit is enjoyed
like Goodwill, Patent, Copyright, Trade Marks etc.
Current Asset may be sub-divided as---
7. Liquid Asset: Which are cash or useable as cash, e.g. Cash, Securities etc.
Circulating Asset: Which can easily converted into cash, e.g. Trade Debtors, Bills
Receivable, Stocks, etc.
Intangible Asset: e.g. Prepaid Expenses, Outstanding Incomes etc.
Moreover Asset may be:
Unrealizable Assets: Having no realisability like preliminary expenses.
Contingent Asset: Which materialize subject to the happening of some uncertain
amount, e.g. damage receivable where the suit is pending etc,. a claim for Income
Tax Refund.
LIABILITIES:
A liability may be defined as any promise to pay money or transfer goods or render
service to a certain person or group of person. In other words, liabilities are claims
of different parties on the asset of a business. The liabilities may be dividing into six
parts. Details are below:
Fixed Liability: Payable after a considerable period of time like long term loan,
debenture.
Current Liability: Payable in near future may be within the next accounting period,
such as Sundry Creditors, Bills Payable, and Outstanding Expenses.
Liquid Liabilities: Which are to be paid at very short notice. Management
Accountants consider all current liabilities as liquid liabilities excluding Bank
Overdraft.
Contingent Liability: Which may arise in future depending on the happening of some
uncertain events, e.g. Bills discounted but not matured, Damages payable still under
dispute, etc.
Internal Liability: Which mean liabilities to the owner of the business, e.g. Profit &
Loss A/c, Reserve, etc.
8. External Liability: Amount Payable to external claimants or authorities, e.g. Bills
Payable, Trade Creditor, etc.
SCHEDULE VI AS PER COMPANIES
ACT,1956
Section 211 requires that every Balance Sheet of a company should provide a true
and fair view of the state of a company as at the end of the financial year and it
should be sent out in the format prescribed in Part I of Schedule VI of the
Companies Act, 1956.
NOTE ON CONCEPT IN DRAFTING OF THE SCHEDULE VI
The Schedule VI’ to the Companies Act, 1956 has been prepared on the following
concept:
(a) To have a ‘readable, useful, transparent and user friendly’ form of
Schedule VI.
9. (b) To set out minimum disclosure requirements which are considered essential to
esure true and fair presentation of the financial position and financial
performance of the company and comparability both with the company’s
previous periods and with other companies.
(c) The Balance Sheet and the Statement of Profit and Loss should not be burdened
with too many disclosure requirements.
(d) To remove the requirements of disclosures no longer considered relevant in view
of the changed socio-economic structure and level of development of the
economy.
(e) To remove disclosure requirements which are meant for statistical purposes only
e.g. Part IV of Schedule VI.
(f) To have inherent flexibility for amendments and industry/sector specific
improvements from time to time and to cater to industry/sector specific
disclosure requirements.
(g) To harmonize and synchronize the general disclosure requirements with
those prescribed in the Accounting Standards by removing the existing
inherent anomalies.
(h) The specific disclosure requirements prescribed in the Accounting Standards are
not incorporated here so that amendment in the Accounting Standard does not
necessitate an amendment in the form of Schedule VI.
(i) To attain compatibility and convergence with the International Accounting
Standards and practices.
METHOD ADOPTED IN DETERMINING THE FORM OF BALANCE SHEET,
BALANCE SHEET
1) Presentation is based upon :
(a) The balanced format in which the sum of the amounts for
liabilities and equity are added together to illustrate that assets
10. equal liabilities plus equity.
(b) The report form i.e. top to bottom or the vertical form.
2) Classification of assets and liabilities:
(a) Classification is based upon current and non-current
assets/liabilities method.
(b) Similar nature of assets/liabilities are grouped into line items.
GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE
SHEET
For the purpose of Part I - Balance Sheet:
1) An asset shall be classified as current when it satisfies any of the following
criteria:
(a) it is expected to be realized in, or is intended for sale or consumption in, the
company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realized within twelve months after the reporting date; or
(d) it is cash or cash equivalent unless it is restricted from being exchanged or used
to settle a liability for at least twelve months after the reporting date.
All other assets shall be classified as non-current.
2) An operating cycle is the time between the acquisition of assets for processing
and their realization in cash or cash equivalents. Where the normal operating cycle
cannot be identified, it is assumed to have a duration of 12 months.
3) A liability shall be classified as current when it satisfies any of the
following criteria:
(a) it is expected to be settled in the company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within twelve months after the reporting date;
or
(d) the company does not have an unconditional right to defer settlement of the
liability for at least twelve months after the reporting date.
11. All other liabilities shall be classified as non-current.
4) A company shall disclose the following in the notes to accounts:
A. Share Capital for each class of share capital :
(a) the number and amount of shares authorized;
(b) the number of shares issued, subscribed and fully paid, and subscribed but not
fully paid;
(c) par value per share;
(d) a reconciliation of the number of shares outstanding at the beginning and at the
end of the period;
(e) the rights, preferences and restrictions attaching to that class including
restrictions on the distribution of dividends and the repayment of capital;
(f) shares in the company held by its holding company or its ultimate holding
company or by its subsidiaries or associates;
(g) shares in the company held by any shareholder holding more than 5 percent
shares;
(h) shares reserved for issue under options and contracts/commitments for the sale
of
shares/disinvestment, including the terms and amounts;
(i) Separate particulars for a period of five years following the year in which the
shares have been allotted/bought back, in respect of:
s Aggregate number and class of shares allotted as fully paid up pursuant to
contract(s) without payment being received in cash.
c Aggregate number and class of shares allotted as fully paid up by way of bonus
shares (Specify the source from which bonusshares are issued).
s Aggregate number and class of shares bought back.
(j) Terms of any security issued along with the earliest date of conversion in
descending order starting from the farthest such date.
B. Reserves and Surplus
(i) Reserves and Surplus shall be classified as:
12. (a) Capital Reserves;
(b) Capital Redemption Reserves;
(c) Securities Premium Reserve;
(d) Debenture Redemption Reserve;
(e) Revaluation Reserve;
(f) Other Reserves – (specify the nature of each reserve and the amount in respect
thereof);
(g) Surplus i.e. balance in statement of Profit & Loss disclosing allocations and
appropriations such as dividend paid, bonus shares and transfer to/from reserves.
(Additions and deductions since last balance sheet to be shown under each of the
specified heads)
(ii) A reserve specifically represented by earmarked investments shall be termed as a
‘fund’.
(iii) The balance of ‘Surplus’ after deducting debit balance of profit and loss account
shall be shown under the head ‘Surplus’ even if the resulting figure is in the
negative. Similarly, the balance of ‘Reserves and Surplus’, after adjusting negative
balance of surplus, if any, shall be shown under the head ‘Reserves and Surplus’
even if the resulting figure is in the negative.
C. Long-Term Borrowings
(i) Long-term borrowings shall be classified as:
(a) Bonds/debentures.
(b) Term loans
( from banks.
( from other parties.
(c) Deferred payment liabilities.
(d) Public deposits.
(e) Loans and advances from subsidiaries/holding company/associates/business
ventures.
(f) Other loans and advances (specify nature).
(ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of
security shall be specified separately in each case.
13. (iii) Where loans have been guaranteed by directors or others, a mention thereof
shall be made and also the aggregate amount of such loans under each head.
(iv) Bonds/debentures (along with the rate of interest and particulars of redemption
or conversion, as the case may be) stated in descending order of maturity or
conversion, starting from farthest redemption or conversion date, as the case may
be. Where bonds/debentures are redeemable by installments, the date of maturity
for this purpose must be reckoned as the date on which the first installment
becomes due.
(v) Particulars of any redeemed bonds/ debentures which the company has power to
reissue.
(vi) Terms of repayment of term loans and other loans.
(vii) Period and amount of default in repayment of dues, providing break-up of
principal and interest shall be specified separately in each case.
D. Long-term provisions
The amounts shall be classified as:
(a) Provision for employee benefits.
(b) Others (specify nature).
E. Short-term borrowings
(i) Short-term borrowings shall be classified as:
(a) Loans repayable on demand
( from banks.
( from other parties.
(b) Loans and advances from subsidiaries/holding company/associates/business
ventures.
(c) Demand deposits.
(d) Other loans and advances (specify nature).
14. (ii) Borrowings shall further be sub-classified as secured and unsecured. Nature of
security shall be specified separately in each case.
(iii) Where loans have been guaranteed by directors or others, a mention thereof
shall be made and also the aggregate amount of loans under each head.
(iv) Period and amount of default in repayment of dues, providing break-up of
principal and interest shall be specified separately in each case.
F. Trade payables
The amounts shown under ‘Trade Payables’ shall include the amounts
due in respect of goods purchased or services received in the normal
course of business.
G. Other current liabilities
The amounts shall be classified as:
(a) Current maturities of long-term debt;
(b) Current maturities of finance lease obligations;
(c) Other payables (specify nature);
(d) Interest accrued but not due on borrowings;
(e) Interest accrued and due on borrowings;
(f) Unearned revenue;
(g) The following amounts shall be shown separately:
( Unpaid dividends
( Unpaid application money received for allotment of securities and due for refund
( Unpaid matured deposits
( Unpaid matured debentures
( Interest accrued on above
H. Short-term provisions
15. The amounts shall be classified as:
(a) Provision for employee benefits.
(b) Others (specify nature).
I. Tangible assets
(i) Classification shall be given as:
(a) Land.
(b) Buildings.
(c) Plant and Equipment.
(d) Furniture and Fixtures.
(e) Vehicles.
(f) Office equipment.
(g) Others (specify nature).
(ii) Assets under lease shall be separately specified under each class of asset.
(iii) A reconciliation of the gross and net carrying amounts of each class of assets at
the beginning and end of the reporting period showing additions, disposals,
acquisitions and other movements and the related depreciation and impairment
losses/reversals shall be disclosed separately.
J. Intangible assets
(i) Classification shall be given as:
(a) Goodwill.
(b) Brands /trademarks.
(c) Computer software.
(d) Mastheads and publishing titles.
(e) Mining rights.
(f) Copyrights, and patents and other intellectual property rights, services and
operating rights.
(g) Recipes, formulae, models, designs and prototypes.
(h) Licenses and franchise.
16. (i) Others (specify nature).
(ii) A reconciliation of the gross and net carrying amounts of each class of assets at
the beginning and end of the reporting period showing additions, disposals,
acquisitions and other movements and the related amortization and impairment
losses/reversals shall be disclosed separately.
K. Non-current investments
(i) Non-current investments shall be classified as:
(a) Investment property;
(b) Investments in Government or trust securities;
(c) Investments in units, debentures or bonds;
(d) Other non-current investments (specify nature)
(ii) The investments held-to-maturity shall be stated separately
(iii) The following shall also be disclosed:
(1) Aggregate amount of quoted investments and market value thereof;
(2) Aggregate amount of unquoted investments;
(3) Aggregate amount of partly paid-up investments;
(4) The names of bodies corporate (indicating separately the names of subsidiaries,
associates and other business ventures) in whose securities, investments have been
made and the nature and extent of the investments so made in each such body
corporate.
L. Long-term loans and advances
(i) Long-term loans and advances shall be classified as:
(a) Capital Advances;
(b) Security Deposits;
(c) To directors / subsidiaries / associates / business venturesloans and advances to
specify separately;
(d) Others (specify nature)- loans and advances to specify separately.
17. (ii) The above shall also be separately sub-classified as:
(a) To the extent secured, considered good;
(b) Others, considered good;
(c) Doubtful.
(iii) Allowance for bad and doubtful loans and advances shall be disclosed under the
relevant heads separately.
M. Other non-current assets
This is an all inclusive heading which incorporates assets that do not fit neatly into
any of the other asset categories.
N. Current Investments
(i) Current investments shall be classified as:
(a) Investments in government or trust securities;
(b) Investments in shares, units, debentures or bonds;
(c) Other investments (specify nature).
(ii) The following shall also be disclosed:
(a) Aggregate amount of quoted investments and market value thereof;
(b) Aggregate amount of unquoted investments;
(c) Aggregate amount of partly paid-up investments.
(iii) Current investments shall be further sub-classified as:
(a) Investments held for trading;
(b) Other investments.
18. O. Inventories
(i) Classification shall be made as:
(a) Raw material;
(b) Work-in-progress;
(c) Finished goods;
(d) Stock-in-trade;
(e) Stores and spares;
(f) Loose tools;
(g) Others (specify nature).
(ii) Goods-in-transit shall be disclosed under the relevant sub-head of
inventories.
P. Trade Receivables
(i) The amounts shown under ‘Trade Receivables’ shall include the amounts due in
respect of goods sold or services rendered in the normal course of business.
(ii) Trade receivables shall also be classified as:
(a) To the extent secured, considered good;
(b) Others, considered good;
(c) Doubtful.
(iii) Allowance for bad and doubtful debts shall be disclosed under the relevant heads
separately.
Q. Cash and cash equivalents
(i) Classification shall be made as:
(a) Bank balances;
(b) Cheques, drafts on hand;
19. (c) Cash balance;
(d) Cash equivalents – short-term, highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an insignificant risk
of changes in value;
(e) Others (specify nature).
(ii) Earmarked bank balances (e.g. unpaid dividend) shall be separately stated.
(iii) Balance with banks to the extent held as security against the borrowings,
guarantees, other commitments shall be disclosed separately.
(iv) Repatriation restrictions, if any, in respect of cash and bank balances shall be
separately stated.
(v) Bank deposits with more than 12 months maturity shall be disclosed separately,
Short-term loans and advances
(i) Loans and advances shall be classified separately as:
(a) To subsidiaries/associates/business ventures;
(b) To others (specify nature).
(ii) The above shall also be sub-classified as:
(a) To the extent secured, considered good;
(b) Others, considered good;
(c) Doubtful.
(iii) Allowance for bad and doubtful loans and advances shall be disclosed under the
relevant heads separately.
S. Other current assets (specify nature).
T. Contingencies and commitments (to the extent not provided for)
(i) Contingencies shall be classified as:
(a) Tax contingencies and law suits (except those where the likelihood of an outflow
of resources is remote);
(b) Guarantees;
20. (c) Other money for which the company is contingently liable (except those where
the likelihood of an outflow of resources is remote).
(ii) Commitments shall be classified as:
(a) Estimated amount of contracts remaining to be executed on capital account and
not provided for;
(b) Uncalled liability on shares and other investments partly paid;
(c) Other commitments (specify nature).
U. The amount of dividends proposed to be distributed to equity holders for the
period and the related amount per share shall be disclosed separately. Arrears of
fixed cumulative dividends shall also be disclosed separately.
21. BALANCE SHEET - VERTICAL
FORMAT:
BALANCE SHEET
Name of Company…………………..
Balance Sheet as at………………….
(Rupees in …………)
Figure as et
Figure as et
end of the
end of current
Particulars previous
reporting
reporting
period
period
1 2 3
22. I. CAPITAL & LIABILITIES
(1) Shareholders Funds
(i) Share
Capital
(ii) Reserve & Surplus
(2) Share Application Money
(3) Non - current liabilities
(i) Long - term
borrowings
(ii) Deferred tax
liabilities (Net)
(iii) Long term
provisions
(4) Current Liabilities
(i) Short term
borrowings
(ii) Trade
payables
(iii) Other current
liabilities
(iv) Short - term
provisions
Total
24. SARAL SCHEDULE VI FOR THE SMALL AND
MEDIUM SIZED COMPANIES TO THE
COMPANIES ACT, 1956
NOTE ON CONCEPT IN DRAFTING OF SARAL SCHEDULE VI
The ‘Saral Schedule VI’ to the Companies Act, 1956 has been prepared on the
following concept:
(a) To have a ‘simple and user friendly’ form of Schedule VI for Small and
Medium Sized Companies (SMC).
(b) The Balance Sheet and the Statement of Profit and Loss of SMC’s should not
be burdened with too many disclosure requirements.
(c) To set out minimum disclosure requirements which are considered essential to
ensure true and fair presentation of the financial position and financial performance
of the company and comparability both with the company’s previous periods and
with other companies.
(d) To attain compatibility and convergence with the International Accounting
Standards and practices.
(e) It is generally assumed that SMC’s
(i) will not have particularly complex transactions;
(ii) do not have public accountability;
(iii) do not hold assets in a fiduciary capacity for a broad group of outsiders;
(iv) accountability is limited to owners and government authorities/agencies.
(f) The ‘Users’ and ‘information needs’ of the Users of financial statements of
SMCs are limited.
25. GENERAL INSTRUCTIONS FOR PREPARATION OF
BALANCE SHEET
For the purpose of Part I - Balance Sheet:
1. An asset shall be classified as current when it satisfies any of the
following criteria:
(e) it is expected to be realized in, or is intended for sale or consumption in, the
company’s normal operating cycle;
(f) it is held primarily for the purpose of being traded;
(g) it is expected to be realized within twelve months after the reporting date; or
(h) it is cash or cash equivalent unless it is restricted from being exchanged or used
to settle a liability for at least twelve months after the reporting date.
All other assets shall be classified as non-current.
2. An operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents. Where the normal
operating cycle cannot be identified, it is assumed to have a duration of 12 months.
3. A liability shall be classified as current when it satisfies any of the
following criteria:
(a) it is expected to be settled in the company’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within twelve months after the reporting date; or
(d) the company does not have an unconditional right to defer settlement of the
liability for at least twelve months after the reporting date. All other liabilities shall be
classified as non-current.
26. 4. A company shall disclose the following in the notes to accounts:
A. Share Capital
Share Capital shall be classified as:
(a) Equity paid-up capital;
(b) Preference paid-up capital;
(c) Shares in the company held by its holding company or the ultimate holding
company or by its subsidiaries or associates shall be disclosed under each class of
shares separately.
B. Reserves and Surplus
(i) Reserves and Surplus shall be classified as:
(a) Capital Reserves;
(b) Revenue Reserves;
(c) Revaluation Reserve;
(d) Surplus i.e. balance in statement of Profit & Loss disclosing allocations and
appropriations such as dividend paid, bonus shares and transfer to/from reserves.
(ii) Reserves and Surplus shall be shown after deducting debit balance of profit and
loss account even if the resulting figure is in the negative.
C. Long-term borrowings
(i) These shall be classified as from banks, public deposits, debentures and others;
(ii) These shall further be sub-classified as secured and unsecured. Nature of
security shall be specified separately in each case.
D. Long-term provisions:
Long-term provisions shall include provision for employee benefits and others.
E. Short-term borrowings
(i) These shall be classified as from banks, demand deposits and others.
(ii) These shall further be sub-classified as secured and unsecured.
Nature of security shall be specified separately in each case.
27. F. Trade payables:
The amounts shown under ‘Trade Payables’ shall include the amounts due in respect
of goods purchased or services received in the normal course of business.
G. Other current liabilities
Other current liabilities shall include current maturities of long-term debt and finance
lease obligations, interest accrued but not due on borrowings, Interest accrued and
due on borrowings, unearned revenue and others.
H. Short-term provisions
Short-term provisions shall include provision for employee benefits and others.
I. Fixed Assets
Fixed assets shall be disclosed at net carrying amounts i.e. original costless
accumulated depreciation, amortization and impairment.
J. Non-current investments
(i) Non-current investments shall be classified as:
(a) Investment property;
(b) Investments in Government or trust securities;
(c) Investments in units, debentures or bonds;
(d) Other non-current investments (specify nature)
(ii) The investments held-to-maturity shall be stated separately
K. Long-term loans and advances
(i) Long-term Loans and Advances shall include capital advances, security deposits
and others.
(ii) The amounts shall be shown net of allowance for bad and doubtful loans and
advances.
L. Current investments
Current investments shall include investments held for trading and others.
28. M. Inventories
Inventories shall include raw material, work-in-progress, finished goods, stock-in-
trade, stores and spares, loose tools, goods-in-transit and others.
N. Trade receivables
(i) The amounts shown under ‘Trade Receivables’ shall include the amounts due in
respect of goods sold or services rendered in the normal course of business.
(ii) The amounts shall be shown net of allowance for bad and doubtful debts.
O. Cash and cash equivalents
(i) Cash shall include cash balance, cheques/drafts in hand and balances with banks
in current accounts.
(ii) Cash equivalents shall include short-term, highly liquid investments that are
readily convertible into known amounts of cash and which are subject to an
insignificant risk of changes in value.
P. Short-term loans and advances
The amounts shall be shown net of allowance for bad and doubtful loans and
advances.
Q. Contingencies and commitments
(to the extent not provided for)
(i) Contingencies shall be classified as:
(a) Tax contingencies and law suits (except those where the likelihood of an outflow
of resources is remote).
(b) Guarantees.
(c) Other money for which the company is contingently liable (except those where
the likelihood of an outflow of resources is remote).
(ii) Commitments shall be classified as:
(d) Estimated amount of contracts remaining to be executed on capital account and
not provided for.
(e) Uncalled liability on shares partly paid.
(f) Other commitments.
29. R. The amount of dividends proposed to be distributed to equity holders for the
period and the related amount per share shall be disclosed separately. Arrears of
fixed cumulative dividends shall also be disclosed separately.
BALANCE SHEET --HORIZENTAL
FORMAT
