Balance Sheet The Balance Sheet shows the financial condition of a business at a specific point of time categorizing financial sheet of the firm under two major heads “Equity & Liabilities” and “Assets”  The balance sheet is based on the fundamental equation: Assets = Liabilities + Equity The balance sheet is one of the major fundamental financial statements used to serve various purposes of financial analysis, accounting and financial modelling Equity & Liabilities represents what the firm owes, the burden or debt The format prescribed in the Companies Act classifies Equity and Liabilities as follows: Shareholders’ Fund, Non-current Liabilities & Current Liabilities Equity is a degree of ownership in any asset after deducting all the debts associated with that asset It represents the shareholders’ stake/ownership in the company Liabilities are defined as a company's financial debts or obligations that arise during the course of business operations Shareholders’ fund represents the contribution made by shareholders in the form of financing for the business Non-current liabilities are liabilities which are expected to be settled in longer period of time usually after one year These include long-term borrowings , deferred tax liabilities, long-term provisions and other long-term liabilities Current Liabilities are liabilities which are due to be settled within a year These include short-term borrowings , trade payables and short-term provisions An asset is any resource owned by the business either tangible or intangible that produce value and is held by a company to for longer period of time to reap positive economic value for the business. As per Companies act , under balance sheet asset is categorized under two main headings :- Current assets and Non- current assets. Current asset is any asset which can reasonably be expected to get sold, consumed, or exhausted through the normal course of a business within the current fiscal year or operating cycle usually within one year Current assets include current investments, inventories, trade receivables, cash& cash equivalents, short-term loans & advances Non-current assets are company’s long-term investments usually in the form of  investments made in property (land & building), plant and equipment, machinery, intangible assets like patents, copyright, trademark, goodwill etc. Thank You For Watching Subscribe to DevTech Finance

1. Balance Sheet

2. INTRODUCTION
• The Balance Sheet shows the financial condition of a business at a
specific point of time categorizing financial sheet of the firm under two
major heads “Equity & Liabilities” and “Assets”
• The balance sheet is based on the fundamental equation:
Assets = Liabilities + Equity
• The balance sheet is one of the major fundamental financial statements
used to serve various purposes of financial analysis, accounting and
financial modelling

3. Total Assets
Current Assets
+
Non- Current Assets
Total Liabilities
Current Liabilities
+
Non- Current Liablities
Shareholder’s Fund
Share Capital
+
Reserve

4. EQUITY AND LIABILITIES AMOUNT
Shareholder’s Fund
Share Capital 1,00,000
Reserves and Surplus 40,000
Non- Current Liabilities
Long-term Borrowings 30,000
Tax Liabilities 1,000
Long-term provisions 10,000
Current Liabilities
Short-term Borrowings 15,000
Trade Payables 10,000
Other Current Liabilities 7,000
Short-term Provisions 7,000
TOTAL 2,20,000
ASSETS AMOUNT
Non-Current Assets
Fixed Assets 1,20,000
Non-Current Investments 20,000
Long-term Loans & Advances 30,000
Current Assets
Current Investments 10,000
Inventories 30,000
Trade Receivables 2,000
Cash & Cash Equivalents 5,000
Short-term Loans & Advances 3,000
TOTAL 2,20,000
Balance Sheet Format

5. EQUITY AND LIABILITIES
• Equity & Liabilities represents what the firm owes, the burden or debt
• The format prescribed in the Companies Act classifies Equity and Liabilities as
follows: Shareholders’ Fund, Non-current Liabilities & Current Liabilities
• Equity is a degree of ownership in any asset after deducting all the debts associated
with that asset
• It represents the shareholders’ stake/ownership in the company
• Liabilities are defined as a company's financial debts or obligations that arise during
the course of business operations

6. SHAREHOLDERS’ FUND
• Shareholders’ fund represents the contribution made by shareholders in
the form of financing for the business
• It includes share capital and reserves as well as surplus
• Share capital : It consists of funds raised by a company in exchange for
shares issued of either equity capital or preference capital of stock
• Reserves & Surplus : It represents the accumulated profit or retained
earning kept as provision. It comprises of general reserve, surplus, capital
reserve, debenture redemption reserve etc.

7. NON- CURRENT LIABILITIES
• Non-current liabilities are liabilities which are expected to be settled in longer
period of time usually after one year
• These include long-term borrowings , deferred tax liabilities, long-term provisions and
other long-term liabilities
• Long-term Borrowings are borrowings which have tenure of more than 1 year to be
paid
• Deferred tax liabilities are tax that are assessed or are due for the current period
but has not yet been paid
• Long-term Provisions includes provisions for employee benefits such as provident
fund, gratuity, leave encashment etc.

8. CURRENT LIABILITIES
• Current Liabilities are liabilities which are due to be settled within a year
• These include short-term borrowings , trade payables and short-term provisions
• Short-term Borrowings are borrowings with a tenure of less then one year to be paid
• It usually consist of short-term loans to meet working capital requirement, commercial
papers, certificate of deposits maturing in less than 1 year
• Trade Payables are amounts owed to suppliers who have sold goods & service on credit
• Short term provisions are liabilities of uncertain amount and timing. Examples are :-
provision for doubtful debts, provision for tax, provision for discount on debtors etc.

9. ASSETS
• An asset is any resource owned by the business either
tangible or intangible that produce value and is held by a
company to for longer period of time to reap positive
economic value for the business.
• As per Companies act , under balance sheet asset is
categorized under two main headings :- Current assets and
Non- current assets.

10. CURRENT ASSETS
• Current asset is any asset which can reasonably be expected to get sold,
consumed, or exhausted through the normal course of a business within the current
fiscal year or operating cycle usually within one year
• Current assets include current investments, inventories, trade receivables, cash&
cash equivalents, short-term loans & advances
• Current investments are the short-term investments made out of surplus primarily
to generate income by investing in equities, bonds or mutual funds
• Inventories are also referred as stocks of raw materials, work-in- progress, finished
goods

11. CONTINUED
• Trade receivables also referred as account receivables or debtors is
the amount that the firm will receive for the sales made on credit to the
customers
• Cash & cash equivalents include bank accounts, marketable
securities, commercial paper, treasury bills and short-term government
bonds with a maturity date of three months or less
• Short-term investments contains investments that a company has
made that are expected to get converted into cash within one year.

12. NON-CURRENT ASSETS
• Non-current assets are company’s long-term investments usually in the
form of investments made in property (land & building), plant and
equipment, machinery, intangible assets like patents, copyright,
trademark, goodwill etc.
• These comprises of fixed assets, non-current investments, long-term
loans & advances usually for time period of more than a year
• Under balance sheet of companies act it comprises of fixed assets, non-
current investments, long-term loans & advances

13. CONTINUED
• Fixed Assets comprise of tangible assets such as land and building,
plant, machinery, furniture and intangible fixed assets such as patent,
copyright, goodwill, trademark etc.
• Non-current Investments generally consist of investments made in
securities like equity shares, preference shares, debentures of other
companies for a longer period of time
• Long-term Loans & Advances are the loans given to subsidiaries,
employees, associates for a longer period of time.

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