This document defines key terms related to a company's balance sheet, including equity, liabilities, assets, and various line items. It explains that a balance sheet provides a snapshot of what a company owns (assets) and owes (liabilities), and that the difference between the two is shareholder equity. Various liability types are outlined such as current vs non-current, as well as asset types like property, plant & equipment, investments, and receivables. Common provisions and reserves that may be included on the balance sheet are also described.

1. ABOUT BALANCE SHEET
BIBHUDUTTA TRIPATHY

2. ABC Company Private Ltd. Balance Sheet as on 31st
March 2024.
Particulars Note
No.
Current
Year
Previous
Year
❖ Equity and Liability
1) Shareholder’s Fund
(a) Share Capital
(b)Reserve & Surplus
(c) Money Received against Share Warrant
2) Share Application Money Pending
Allotment
3) Non-Current Liabilities
(a) Long Term Borrowing
(b)Deferred Tax Liability (Net)
(c) Other Long-Term Liability
(d)Long Term Provision
4) Current Liabilities
(a) Short-Term Borrowing
(b)Trade Payables
(c) Other Current Liabilities
(d)Short-Term Provision
Total---------
❖ Assets
1) Non-Current Assets
(a) Property, Plant, Equipment & Intangible Asset
a. Property, Plant & Equipment
b. Intangible Assets
c. Capital Work in Progress
d. Intangible Asset on Development
(b) Non-Current Investment
(c) Deferred Tax Assets
(d) Long-Term Loan & Advances
(e) Other Non-Current Assets
2) Current Assets
(a) Current Investment
(b) Inventories
(c) Trade Receivable
(d) Cash & Cash Equivalent
(e) Short-Term Loan & Advance
(f) Other Current Assets Total---------

3. ❖ What is equity means?
✓ Equity is the amount of capital invested or owned by the owner of a
company.
✓ The equity is evaluated by the difference between liabilities and assets
recorded on the balance sheet of a company.
✓ The formula to calculate equity is: Total equity = Total assets – Total
liabilities.
❖ What is Liability?
• Liability is a term that any kind of financial obligation that a business has
to pay at the end of an accounting period to a person or a business.
• Liabilities are settled by transferring economic benefits such as money,
goods or services.
• Types of Liabilities: -
Current Liabilities: - Current liabilities are settled using current assets, which are
assets that are used up within one year. Examples of current liabilities
include accounts payable, short-term debt, dividends, and notes payable as well
as income taxes owed.
Non-Current Liabilities: - A non-current liability refers to the financial
obligations in a company's balance sheet that are not expected to be paid within
one year. Example- debentures, long-term loans, bonds payable, deferred tax
liabilities, long-term lease obligations, and pension benefit obligations.
Contingent Liabilities: - A contingent liability is a liability or a potential loss that
may occur in the future depending on the outcome of a specific event. Potential
lawsuits, product warranties, and pending investigation are some examples of
contingent liability.
❖ What is share?
A share represents a unit of equity ownership in a company.
❖ What is share capital?
Share capital is the funding a company has raised through issuing common or
preferred stock.
Share capital formula = Issue Price per Share * Number of Outstanding Shares.
= $10 * 100,000 = $1 million.

4. ❖ What is capital?
Capital is typically cash or liquid assets being held or obtained for expenditures.
In a broader sense, the term may be expanded to include all of a company's assets
that have monetary value, such as its equipment, real estate, and inventory.
Types of Capital: -
Authorized Share Capital: - the maximum amount of capital a company can issue
legally or offer based on its corporate charter. There is no maximum limit.
Issued Share Capital: - Issued Share Capital is the total value of shares that a
company has issued to its shareholders.
Subscribed Share Capital: - It refers to any capital raised through subscribed
shares. Put simply, it's the value of all the shares that investors agree to purchase
during a new issuance. Subscribed shares are a certain amount of stock that
investors promise to purchase during an offering, usually through an IPO.
Called-Up Share Capital: - Called-up share capital consists of shares that are not
fully paid for upfront.
Paid-up Share Capital: - Is the amount of money received by the company when
it sells its share to the shareholders and investors directly through the primary
market.
❖ What is reserve and surplus?
Reserves are the funds earmarked for a specific purpose, which the company
intends to use in future.
For example, paying legal settlements, purchasing fixed assets, paying dividends,
repaying debts, etc.
❖ What is Non-Current Liabilities?
A non-current liability refers to the financial obligations in a company's balance
sheet that are not expected to be paid within one year.
Example: - Debentures, long-term loans, bonds payable, deferred tax liabilities,
long-term lease obligations, and pension benefit obligations.

5. ❖ What is current liabilities?
Current liabilities are typically settled using current assets, which are assets that
are used up within one year.
Examples of current liabilities include accounts payable, short-term debt,
dividends, and notes payable as well as income taxes owed.
❖ What is Borrowing?
Borrowing is a temporary possession of money with the intent to repay the
amount borrowed. In a financial sense, if you borrow money, you assume a debt
to the lender, this debt contains the principal amount plus interest.
❖ What is Deferred Tax Liability?
It is an item of the balance sheet that increases the income tax liability of an entity
or decreases the amount of tax refund in future periods.
❖ What is Deferred Tax Liability?
A Deferred Tax Asset is an item of the balance sheet that ultimately either reduces
the income tax liability of an entity for future periods or results in a refund of an
already paid amount of income tax.
❖ What is provision?
Provisions essentially refer to any funds set aside from company profits for this
express purpose.
Example: - Bad debts, guarantees, depreciation, pensions, inventory
obsolescence, restructuring liabilities and sales allowances.
Long-term Provisions are Provision for renewals and repairs, Provision for
depreciation.
Short term provisions we mean that the provision is created to meet the short
obligations/payments.
❖ What is Trade Payable?
Trade payables are short-term expenses incurred by businesses when they use
products or services from a third-party vendor or supplier to deliver their products
to their customer.
❖ What is Trade Payable?
Trade receivables are defined as the amount owed to a business by its
customers following the sale of products or services on credit.

6. ❖ what is meant by cash and cash equivalent?
Cash and cash equivalents refers to the line item on the balance sheet that reports
the value of a company's assets that are cash or can be converted into cash
immediately.
❖ What do you mean by assets?
An asset is a resource with economic value that an individual, corporation, or
country owns or controls with the expectation that it will provide a future benefit.
Types: -