Balance sheet

Balance Sheet

1. Amity International Business School
AIBS
MIB, Semester 1
Accounting and Finance
Navneet Saxena

2. Amity International Business SchoolObjective
•In this session we will learn about
–Balance Sheet

3. Amity International Business SchoolBalance Sheet
•A Balance Sheet is one of the financial
statements
•A Balance Sheet is a statement of assets and
liabilities of an enterprise at a given date
•It is called a Balance Sheet because it is a sheet
of balances of those ledger accounts which have
not been closed till the preparation of the
Trading and Profit and Loss Account

4. Amity International Business SchoolCharacteristics
•A Balance Sheet is only a statement and
not an account
•It has no debit side or credit side
•The headings of the two sides are Assets
and Liabilities
•A Balance Sheet is prepared at a
particular point of time and not for a
particular period

5. Amity International Business SchoolCharacteristics
•The information contained in a Balance Sheet is
true only at the particular point of time at which it
is prepared
•A Balance Sheet is a summary of balances of
those ledger accounts which have not been
closed by transfer to the Trading and Profit and
Loss Account
•A Balance Sheet shows the nature and value of
assets and the nature and the amount of
liabilities at a given date

6. Amity International Business SchoolNeed for Preparation
of Balance Sheet
•To ascertain the nature and value of
assets of a business
•To ascertain the nature and amount of
liabilities of a business
•To find out the financial solvency of an
enterprise
–An enterprise is considered to be solvent if its
assets exceed its external liabilities

7. Amity International Business SchoolContents of
Balance Sheet
•Assets
–Current Assets
–Investments
–Fixed Assets
•Tangible Fixed Assets
•Intangible Fixed Assets

8. Amity International Business SchoolContents of
Balance Sheet
•Liabilities Side
–Liabilities
•Current Liability
•Long-term Liability
–Capital

9. Amity International Business SchoolGrouping and Marshalling
of Assets and Liabilities
•Grouping – putting together items of a
similar nature under a common heading
•Marshalling – order in which the various
assets and liabilities are shown in the
Balance Sheet
•The assets and liabilities can be shown
either in the
–Order of liquidity
–Order of permanency

10. Amity International Business School

11. Amity International Business SchoolRecap
•In this session we learnt about
–Balance Sheet

12. Amity International Business SchoolNext Session
•In the next session we will learn about
–Final Accounts