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Balance Sheet
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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