Amity International Business School

AIBSMIB, Semester 1

Accounting and Finance

Navneet Saxena

Amity International Business SchoolObjective

• In this session we will learn about– Balance Sheet

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

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

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

Amity International Business SchoolNeed for Preparationof 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

Amity International Business SchoolContents ofBalance Sheet

• Assets

– Current Assets

– Investments

– Fixed Assets

• Tangible Fixed Assets

• Intangible Fixed Assets

Amity International Business SchoolContents ofBalance Sheet

• Liabilities Side

– Liabilities

• Current Liability

• Long-term Liability

– Capital

Amity International Business SchoolGrouping and Marshallingof 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

Amity International Business School

Amity International Business SchoolRecap

• In this session we learnt about– Balance Sheet

Amity International Business SchoolNext Session

• In the next session we will learn about– Final Accounts