balance sheet 1062

8/3/2019 Balance Sheet 1062

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ASIA PACIFIC INSTITUTE OF MANAGEMENT

STUDIES

SUBMITTED TO SUBMITTED ByPRETTI MAHESHWARI SECTION-H

GROUP-4

Debojit-66Abhisek-03Niraj-30Sritanu-57Krishnakant-25Biswajit-12


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CONTENTS:

UNDERSTANDING THE MEANING OFUNDERSTANDING THE MEANING OFBALANCE SHEETBALANCE SHEET

FEATURES OF BALANCE SHEETFEATURES OF BALANCE SHEET

PURPOSE OF A BALANCE SHEETPURPOSE OF A BALANCE SHEET

LIMITATION OF BALANCE SHEETLIMITATION OF BALANCE SHEET

COMPONENT OF BALANCE SHEETCOMPONENT OF BALANCE SHEET

BALANCE SHEET AS PER SCH.VI OFBALANCE SHEET AS PER SCH.VI OFCOMPANIES ACT, 1956COMPANIES ACT, 1956

BALANCE SHEET VERTICAL FORMAT:BALANCE SHEET VERTICAL FORMAT:

SARAL SCHEDULE VI FOR THE SMALLSARAL SCHEDULE VI FOR THE SMALLAND MEDIUMAND MEDIUM

BALANCE SHEET --- HORIZENTALBALANCE SHEET --- HORIZENTALFORMATFORMAT


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BALANCE SHEET

Concept:

The American Institute of Certified Public Accountants definesbalance sheet as tabular statement of summary of balances (debits andcredits) carried forward after an actual and constructive closing of booksof account and kept according to the principles of accounting. Thepurpose of balance sheet is to show the resources that the company has,

i.e. its assets, and from where those resources come from, i.e. its liabilitiesand investments by owners and outsiders.

The balance sheet is one of the important statements depicting thefinancial strength as well as the financial position on the closing date ofthe financial period of the company. The balances of the real accounts andpersonal accounts appearing in the Trial Balance are grouped as assets orliabilities on their nature of balances. These are arranged in thesystematic manner and shown in the Balance Sheet after makingnecessary adjustments like depreciation, provision etc.

It is a statement not an account. Commonwealth countries like Indiafollow the format of a Balance Sheet as prescribed by the BritishCompanies Act 1856. It shows all liabilities and capital on the left handside and all assets on the right hand side of the statement. USA andAustralia prepare their Balance Sheet in the opposite manner.

The assets and liabilities are to be arranged in the Balance Sheetaccording to a particular sequence or order. This is known asMarshalling. Such sequence may be made under----

i) Liquidity Preference Method: The Balance Sheet starts with the

most liquid assets and liabilities and ends with least liquid assets andliabilities.

ii) Performance or Rigidity Preference Method: The least liquidassets and liabilities are placed first and end with the most liquid assetsand liabilities.

Under this both method investment are placed in between. Limitedcompanies follow the format of balance sheet as provide under Part I,Schedule VI of the Indian Company Act 1956.


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FEATURES OF BALANCE SHEET

i) It is a statement but not an account: No closing entry is required totransfer assets or liabilities to the Balance Sheet. It shows the stock ofassets and liabilities at a particular date.

ii) It is a summary of unallocated balances: According to the matching costconcept, the costs allocated to any accounting period are matched againstcorresponding revenues. The left over portion of costs, that is, theunallocated portion is carried forward to the next period as asset.Liabilities represent the sacrifices that tantamount to the unallocated

costs. So, the Balance Sheet contains unallocated costs and correspondingsacrifices.

iii) It acts as a buffer between the transactions of two consecutiveaccounting periods: According to the going concern concept a business isexpected to continue over an indefinite life span. The Balance Sheets areinterim financial report with in this span and build up the link or bridgebetween two accounting period.

iv) It acts as a resource statement: Smith & Keith observed that a BalanceSheet shows the economic resources of the business at a point in time andthe sources of those resources at the point of time.


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PURPOSE OF BALANCE SHEET:

Disclosure of values and natures of assets and liabilities: Assets and

liabilities are shown in the Balance Sheet following some systematic order.This gives an idea about their natures whether fixed or fluctuating orcurrent or tangible, etc. The value of these assets and liabilities are alsomade following some consistent principles.Information about solvency: The working capital position and the short runsolvency of a business can be easily assessed from its current assets andcurrent liabilities. On the other hand fixed assets and long term loans givean idea about the long run prospect.Information about liquidity: The Balance Sheets clearly exhibits the liquidassets and the readily payable external debts. It creates a transparencyregarding the liquidity position.

Information about other necessary aspect: A Balance Sheet helps to knowabout the capital employed, the nature of capitalization, the risk factorinvolved, the business potential, trend of profitability, managerialefficiency and economic growth in a business.Provision of a yardstick of measurement: Accounting is, at present,considered as a measurement discipline. By providing a measure ofeconomic resources and sacrifices on a particular date, a Balance Sheetserves as a yardstick of measurement.

LIMITATION OF BALANCE SHEET:

The Balance Sheet usually shows fixed assets at depreciated values oftheir historical costs, that is, the cost incurred at the time of theiracquisition. But in a situation where the price level becomes subject tofrequent changes, the values depicted in the Balance Sheet remainincorrect.


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Fictitious, unrealizable and bogus assets like Unwritten off Expensesalso find place in the Balance Sheet which entirely goes against the valuemechanism.A Balance Sheet as a transactional statement of assets and liabilitiesbecomes a static statement of funds, it fails to bring out important aspectslike business trend, managerial efficiency, etc.

A Balance Sheet fails to disclose human and efficiency of workers. Itignores qualitative aspects.Balance Sheet as an indicator of financial resources, enjoyed centralattention till the 1930s. Thereafter, income statement like profit & lossaccounts enjoy more attention as they can explain how and what amountof income have been generated during an accounting period.

CONTENTS OF BALANCE SHEET

Asset:

It means a claim or right which will render future value to a business. Anyexpenditure whose entire benefit has been utilized fully, from whichfurther services or opportunities will be received and which the businesshas got right and ownership is called an asset. Asset may be broadlydivided into (a) Fixed Asset held by a concern over years for re-use toearn income over years and (b) Current Asset expected to be realized orconvert into cash or consumed during the normal operating cycle of theaccounting period.

Fixed Asset may be further sub-divided as-----

Tangible Asset: Whose existence can be seen and felt, e.g. Building,

Machinery, Plant, Furniture etc.Intangible Asset: Whose existence remains invisible but whose benefit isenjoyed like Goodwill, Patent, Copyright, Trade Marks etc.

Current Asset may be sub-divided as---

Liquid Asset: Which are cash or useable as cash, e.g. Cash, Securitiesetc.


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Circulating Asset: Which can easily converted into cash, e.g. TradeDebtors, Bills Receivable, Stocks, etc.

Intangible Asset: e.g. Prepaid Expenses, Outstanding Incomes etc.

Moreover Asset may be:

Unrealizable Assets: Having no realisability like preliminary expenses.Contingent Asset: Which materialize subject to the happening of someuncertain amount, e.g. damage receivable where the suit is pending etc,.a claim for Income Tax Refund.

LIABILITIES:

A liability may be defined as any promise to pay money or transfer goodsor render service to a certain person or group of person. In other words,liabilities are claims of different parties on the asset of a business. Theliabilities may be dividing into six parts. Details are below:

Fixed Liability: Payable after a considerable period of time like long termloan, debenture.

Current Liability: Payable in near future may be within the nextaccounting period, such as Sundry Creditors, Bills Payable, andOutstanding Expenses.Liquid Liabilities: Which are to be paid at very short notice. Management

Accountants consider all current liabilities as liquid liabilities excludingBank Overdraft.Contingent Liability: Which may arise in future depending on thehappening of some uncertain events, e.g. Bills discounted but notmatured, Damages payable still under dispute, etc.

Internal Liability: Which mean liabilities to the owner of the business,e.g. Profit & Loss A/c, Reserve, etc.


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External Liability: Amount Payable to external claimants or authorities,e.g. Bills Payable, Trade Creditor, etc.

SCHEDULE VI AS PER COMPANIESACT,1956

Section 211 requires that every Balance Sheet of a company shouldprovide a true and fair view of the state of a company as at the end of thefinancial year and it should be sent out in the format prescribed in Part I ofSchedule VI of the Companies Act, 1956.

NOTE ON CONCEPT IN DRAFTING OF THE SCHEDULE VI

The Schedule VI to the Companies Act, 1956 has been prepared on thefollowing concept:

(a) To have a readable, useful, transparent and user friendly form ofSchedule VI.

(b) To set out minimum disclosure requirements which are consideredessential to


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esure true and fair presentation of the financial position and financialperformance of the company and comparability both with the

companysprevious periods and with other companies.

(c) The Balance Sheet and the Statement of Profit and Loss should not be

burdenedwith too many disclosure requirements.

(d) To remove the requirements of disclosures no longer consideredrelevant in view

of the changed socio-economic structure and level of development ofthe

economy.

(e) To remove disclosure requirements which are meant for statisticalpurposes only

e.g. Part IV of Schedule VI.

(f) To have inherent flexibility for amendments and industry/sector specificimprovements from time to time and to cater to industry/sector

specificdisclosure requirements.

(g) To harmonize and synchronize the general disclosure requirementswith

those prescribed in the Accounting Standards by removing the existinginherent anomalies.

(h) The specific disclosure requirements prescribed in the AccountingStandards are

not incorporated here so that amendment in the Accounting Standarddoes not

necessitate an amendment in the form of Schedule VI.

(i) To attain compatibility and convergence with the InternationalAccounting

Standards and practices.


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METHOD ADOPTED IN DETERMINING THE FORM OF BALANCESHEET,

BALANCE SHEET

1) Presentation is based upon :

(a) The balanced format in which the sum of the amounts forliabilities and equity are added together to illustrate that

assetsequal liabilities plus equity.

(b) The report form i.e. top to bottom or the vertical form.

2) Classification of assets and liabilities:(a) Classification is based upon current and non-current

assets/liabilities method.(b) Similar nature of assets/liabilities are grouped into line items.

GENERAL INSTRUCTIONS FOR PREPARATION OFBALANCE SHEET

For the purpose of Part I - Balance Sheet:

1) An asset shall be classified as current when it satisfies any of thefollowing criteria:

(a) it is expected to be realized in, or is intended for sale or consumptionin, the companys normal operating cycle;(b) it is held primarily for the purpose of being traded;(c) it is expected to be realized within twelve months after the reportingdate; or(d) it is cash or cash equivalent unless it is restricted from beingexchanged or used to settle a liability for at least twelve months after thereporting date.

All other assets shall be classified as non-current.

2) An operating cycle is the time between the acquisition of assets forprocessing and their realization in cash or cash equivalents. Where thenormal operating cycle cannot be identified, it is assumed to have aduration of 12 months.


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3) A liability shall be classified as current when it satisfies any of thefollowing criteria:

(a) it is expected to be settled in the companys normal operating cycle;(b) it is held primarily for the purpose of being traded;

(c) it is due to be settled within twelve months after the reporting date;or

(d) the company does not have an unconditional right to defer settlementof the liability for at least twelve months after the reporting date.

All other liabilities shall be classified as non-current.

4) A company shall disclose the following in the notes to accounts:

A. Share Capital for each class of share capital :

(a) the number and amount of shares authorized;(b) the number of shares issued, subscribed and fully paid, and subscribedbut not fully paid;(c) par value per share;(d) a reconciliation of the number of shares outstanding at the beginningand at the end of the period;(e) the rights, preferences and restrictions attaching to that class includingrestrictions on the distribution of dividends and the repayment of capital;(f) shares in the company held by its holding company or its ultimateholding company or by its subsidiaries or associates;(g) shares in the company held by any shareholder holding more than 5

percent shares;(h) shares reserved for issue under options and contracts/commitmentsfor the sale of

shares/disinvestment, including the terms and amounts;

(i) Separate particulars for a period of five years following the year inwhich the shares have been allotted/bought back, in respect of:

Aggregate number and class of shares allotted as fully paid up pursuant to contract(s) without payment being received in cash.

Aggregate number and class of shares allotted as fully paid up by way of bonus shares (Specify the source from which bonusshares are issued).

Aggregate number and class of shares bought back.


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(j) Terms of any security issued along with the earliest date of conversionin descending order starting from the farthest such date.

B. Reserves and Surplus

(i) Reserves and Surplus shall be classified as:

(a) Capital Reserves;(b) Capital Redemption Reserves;(c) Securities Premium Reserve;(d) Debenture Redemption Reserve;(e) Revaluation Reserve;(f) Other Reserves (specify the nature of each reserve and the amount inrespect thereof);(g) Surplus i.e. balance in statement of Profit & Loss disclosing allocations

and appropriations such as dividend paid, bonus shares and transferto/from reserves. (Additions and deductions since last balance sheet to beshown under each of the specified heads)

(ii) A reserve specifically represented by earmarked investments shall betermed as a fund.

(iii) The balance of Surplus after deducting debit balance of profit andloss account shall be shown under the head Surplus even if the resultingfigure is in the negative. Similarly, the balance of Reserves and Surplus,after adjusting negative balance of surplus, if any, shall be shown under

the head Reserves and Surplus even if the resulting figure is in thenegative.

C. Long-Term Borrowings

(i) Long-term borrowings shall be classified as:

(a) Bonds/debentures.(b) Term loans

from banks.

from other parties.


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(c) Deferred payment liabilities.(d) Public deposits.(e) Loans and advances from subsidiaries/holdingcompany/associates/business ventures.(f) Other loans and advances (specify nature).

(ii) Borrowings shall further be sub-classified as secured and unsecured.Nature of security shall be specified separately in each case.

(iii) Where loans have been guaranteed by directors or others, a mentionthereof shall be made and also the aggregate amount of such loans undereach head.

(iv) Bonds/debentures (along with the rate of interest and particulars ofredemption or conversion, as the case may be) stated in descending orderof maturity or conversion, starting from farthest redemption or conversiondate, as the case may be. Where bonds/debentures are redeemable by

installments, the date of maturity for this purpose must be reckoned asthe date on which the first installment becomes due.

(v) Particulars of any redeemed bonds/ debentures which the companyhas power to reissue.(vi) Terms of repayment of term loans and other loans.

(vii) Period and amount of default in repayment of dues, providing break-up of principal and interest shall be specified separately in each case.

D. Long-term provisions

The amounts shall be classified as:

(a) Provision for employee benefits.(b) Others (specify nature).

E. Short-term borrowings

(i) Short-term borrowings shall be classified as:

(a) Loans repayable on demand

from banks.

from other parties.


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(b) Loans and advances from subsidiaries/holdingcompany/associates/business ventures.(c) Demand deposits.

(d) Other loans and advances (specify nature).

(ii) Borrowings shall further be sub-classified as secured and unsecured.Nature of security shall be specified separately in each case.

(iii) Where loans have been guaranteed by directors or others, a mentionthereof shall be made and also the aggregate amount of loans under eachhead.

(iv) Period and amount of default in repayment of dues, providing break-up of principal and interest shall be specified separately in each case.

F. Trade payables

The amounts shown under Trade Payables shall include the amountsdue in respect of goods purchased or services received in the normalcourse of business.

G. Other current liabilities


(a) Current maturities of long-term debt;(b) Current maturities of finance lease obligations;(c) Other payables (specify nature);(d) Interest accrued but not due on borrowings;(e) Interest accrued and due on borrowings;(f) Unearned revenue;(g) The following amounts shall be shown separately:

Unpaid dividendsUnpaid application money received for allotment of securities and due

for refundUnpaid matured depositsUnpaid matured debenturesInterest accrued on above


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H. Short-term provisions


(a) Provision for employee benefits.(b) Others (specify nature).

I. Tangible assets

(i) Classification shall be given as:

(a) Land.(b) Buildings.(c) Plant and Equipment.(d) Furniture and Fixtures.(e) Vehicles.(f) Office equipment.(g) Others (specify nature).

(ii) Assets under lease shall be separately specified under each class of

asset.(iii) A reconciliation of the gross and net carrying amounts of each class ofassets at the beginning and end of the reporting period showing additions,disposals, acquisitions and other movements and the related depreciationand impairment losses/reversals shall be disclosed separately.

J. Intangible assets

(i) Classification shall be given as:

(a) Goodwill.(b) Brands /trademarks.(c) Computer software.(d) Mastheads and publishing titles.(e) Mining rights.(f) Copyrights, and patents and other intellectual property rights, servicesand operating rights.(g) Recipes, formulae, models, designs and prototypes.


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(h) Licenses and franchise.

(i) Others (specify nature).(ii) A reconciliation of the gross and net carrying amounts of each class ofassets at the beginning and end of the reporting period showing additions,disposals, acquisitions and other movements and the related amortizationand impairment losses/reversals shall be disclosed separately.

K. Non-current investments

(i) Non-current investments shall be classified as:

(a) Investment property;(b) Investments in Government or trust securities;(c) Investments in units, debentures or bonds;(d) Other non-current investments (specify nature)

(ii) The investments held-to-maturity shall be stated separately(iii) The following shall also be disclosed:

(1) Aggregate amount of quoted investments and market value thereof;

(2) Aggregate amount of unquoted investments;(3) Aggregate amount of partly paid-up investments;(4) The names of bodies corporate (indicating separately the names ofsubsidiaries, associates and other business ventures) in whose securities,investments have been made and the nature and extent of theinvestments so made in each such body corporate.

L. Long-term loans and advances

(i) Long-term loans and advances shall be classified as:

(a) Capital Advances;(b) Security Deposits;(c) To directors / subsidiaries / associates / business venturesloans andadvances to specify separately;(d) Others (specify nature)- loans and advances to specify separately.


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(ii) The above shall also be separately sub-classified as:

(a) To the extent secured, considered good;(b) Others, considered good;(c) Doubtful.(iii) Allowance for bad and doubtful loans and advances shall be disclosedunder the relevant heads separately.

M. Other non-current assets

This is an all inclusive heading which incorporates assets that do not fitneatly into any of the other asset categories.

N. Current Investments

(i) Current investments shall be classified as:

(a) Investments in government or trust securities;(b) Investments in shares, units, debentures or bonds;(c) Other investments (specify nature).

(ii) The following shall also be disclosed:

(a) Aggregate amount of quoted investments and market value thereof;(b) Aggregate amount of unquoted investments;(c) Aggregate amount of partly paid-up investments.

(iii) Current investments shall be further sub-classified as:

(a) Investments held for trading;(b) Other investments.


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O. Inventories

(i) Classification shall be made as:

(a) Raw material;(b) Work-in-progress;(c) Finished goods;

(d) Stock-in-trade;(e) Stores and spares;(f) Loose tools;(g) Others (specify nature).

(ii) Goods-in-transit shall be disclosed under the relevant sub-headof

inventories.

P. Trade Receivables

(i) The amounts shown under Trade Receivables shall include theamounts due in respect of goods sold or services rendered in the normalcourse of business.

(ii) Trade receivables shall also be classified as:

(a) To the extent secured, considered good;(b) Others, considered good;(c) Doubtful.

(iii) Allowance for bad and doubtful debts shall be disclosed under therelevant heads separately.

Q. Cash and cash equivalents

(i) Classification shall be made as:


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(a) Bank balances;(b) Cheques, drafts on hand;(c) Cash balance;(d) Cash equivalents short-term, highly liquid investments that arereadily convertible into known amounts of cash and which are subject toan insignificant risk of changes in value;

(e) Others (specify nature).

(ii) Earmarked bank balances (e.g. unpaid dividend) shall be separatelystated.(iii) Balance with banks to the extent held as security against theborrowings, guarantees, other commitments shall be disclosed separately.

(iv) Repatriation restrictions, if any, in respect of cash and bank balancesshall be separately stated.(v) Bank deposits with more than 12 months maturity shall be disclosedseparately, Short-term loans and advances

(i) Loans and advances shall be classified separately as:

(a) To subsidiaries/associates/business ventures;(b) To others (specify nature).

(ii) The above shall also be sub-classified as:

(a) To the extent secured, considered good;(b) Others, considered good;(c) Doubtful.

(iii) Allowance for bad and doubtful loans and advances shall be disclosedunder the relevant heads separately.

S. Other current assets (specify nature).

T. Contingencies and commitments (to the extent not provided for)

(i) Contingencies shall be classified as:

(a) Tax contingencies and law suits (except those where the likelihood ofan outflow of resources is remote);


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(b) Guarantees;(c) Other money for which the company is contingently liable (exceptthose where the likelihood of an outflow of resources is remote).

(ii) Commitments shall be classified as:

(a) Estimated amount of contracts remaining to be executed on capitalaccount and not provided for;

(b) Uncalled liability on shares and other investments partly paid;(c) Other commitments (specify nature).

U. The amount of dividends proposed to be distributed to equity holdersfor the period and the related amount per share shall be disclosedseparately. Arrears of fixed cumulative dividends shall also be disclosedseparately.


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BALANCE SHEET - VERTICAL

FORMAT:

BALANCE SHEET

Name of Company..Balance Sheet as at.

(Rupees in )

Particulars

Figure as etend ofcurrentreportingperiod

Figure as etend of thepreviousreportingperiod

1 2 3

I. CAPITAL & LIABILITIES

(1) Shareholders Funds

(i) ShareCapital(ii) Reserve &Surplus

(2) Share Application Money

(3)Non - currentliabilities

(i) Long - termborrowings(ii) Deferred taxliabilities (Net)(iii) Long termprovisions


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(4) Current Liabilities

(i) Short termborrowings(ii) Tradepayables

(iii) Other currentliabilities(iv) Short - termprovisions

Total

ASSETSII.(1) Non - current asset

(i) FixedAssets

(a) Tangibleassets(b) Intangibleassets Capital Work-in-

progress(d) Intangible assets underdevelopment

(ii) Non-currentinvestments(iii) Deferred taxassets (Net)(iv) Long term loans andadvances(v) Other non-currentassets

(2)CurrentAssets

(i) Currentinvestments(ii)Inventories(iii) Trade receivables(iv0 Cash and cash


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equivalents

(v) Short-term loans andadvances(vi) Other currentassets

Total

SARAL SCHEDULE VI FOR THE SMALL AND

MEDIUM SIZED COMPANIES TO THE

COMPANIES ACT, 1956

NOTE ON CONCEPT IN DRAFTING OF SARAL SCHEDULE VI

The Saral Schedule VI to the Companies Act, 1956 has been prepared onthe following concept:

(a) To have a simple and user friendly form of Schedule VI for Small andMedium Sized Companies (SMC).

(b) The Balance Sheet and the Statement of Profit and Loss of SMCsshould notbe burdened with too many disclosure requirements.

(c) To set out minimum disclosure requirements which are consideredessential to ensure true and fair presentation of the financial position andfinancial performance of the company and comparability both with thecompanys previous periods and with other companies.


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(d) To attain compatibility and convergence with the InternationalAccounting Standards and practices.

(e) It is generally assumed that SMCs

(i) will not have particularly complex transactions;

(ii) do not have public accountability;

(iii) do not hold assets in a fiduciary capacity for a broad group ofoutsiders;

(iv) accountability is limited to owners and governmentauthorities/agencies.

(f) The Users and information needs of the Users of financial statementsof

SMCs are limited.

GENERAL INSTRUCTIONS FOR PREPARATION OFBALANCE SHEET

For the purpose of Part I - Balance Sheet:

1. An asset shall be classified as current when it satisfies any ofthe following criteria:

(e) it is expected to be realized in, or is intended for sale or consumptionin, the companys normal operating cycle;

(f) it is held primarily for the purpose of being traded;

(g) it is expected to be realized within twelve months after the reportingdate; or

(h) it is cash or cash equivalent unless it is restricted from beingexchanged or used to settle a liability for at least twelve months after thereporting date.


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All other assets shall be classified as non-current.

2. An operating cycle is the time between the acquisition ofassets for processing and their realization in cash or cash equivalents.Where the normal operating cycle cannot be identified, it is assumed to

have a duration of 12 months.

3. A liability shall be classified as current when it satisfies any ofthe following criteria:

(a) it is expected to be settled in the companys normal operating cycle;

(b) it is held primarily for the purpose of being traded;

(c) it is due to be settled within twelve months after the reporting date; or

(d) the company does not have an unconditional right to defer settlementof the liability for at least twelve months after the reporting date. All otherliabilities shall be classified as non-current.

4. A company shall disclose the following in the notes toaccounts:

A. Share Capital

Share Capital shall be classified as:(a) Equity paid-up capital;(b) Preference paid-up capital;(c) Shares in the company held by its holding company or the ultimateholding company or by its subsidiaries or associates shall be disclosedunder each class of shares separately.

B. Reserves and Surplus(i) Reserves and Surplus shall be classified as:(a) Capital Reserves;(b) Revenue Reserves;(c) Revaluation Reserve;


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(d) Surplus i.e. balance in statement of Profit & Loss disclosing allocationsand appropriations such as dividend paid, bonus shares and transferto/from reserves.

(ii) Reserves and Surplus shall be shown after deducting debit balance ofprofit and loss account even if the resulting figure is in the negative.

C. Long-term borrowings(i) These shall be classified as from banks, public deposits, debentures andothers;

(ii) These shall further be sub-classified as secured and unsecured. Natureof security shall be specified separately in each case.

D. Long-term provisions:Long-term provisions shall include provision for employee benefits and

others.

E. Short-term borrowings(i) These shall be classified as from banks, demand deposits and others.

(ii) These shall further be sub-classified as secured and unsecured.Nature of security shall be specified separately in each case.

F. Trade payables:The amounts shown under Trade Payables shall include the amounts duein respect of goods purchased or services received in the normal course of

business.

G. Other current liabilitiesOther current liabilities shall include current maturities of long-term debtand finance lease obligations, interest accrued but not due on borrowings,Interest accrued and due on borrowings, unearned revenue and others.

H. Short-term provisionsShort-term provisions shall include provision for employee benefits andothers.

I. Fixed Assets


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Fixed assets shall be disclosed at net carrying amounts i.e. originalcostless accumulated depreciation, amortization and impairment.

J. Non-current investments

(i) Non-current investments shall be classified as:

(a) Investment property;(b) Investments in Government or trust securities;(c) Investments in units, debentures or bonds;(d) Other non-current investments (specify nature)

(ii) The investments held-to-maturity shall be stated separately

K. Long-term loans and advances

(i) Long-term Loans and Advances shall include capital advances, security

deposits and others.

(ii) The amounts shall be shown net of allowance for bad and doubtfulloans and advances.

L. Current investmentsCurrent investments shall include investments held for trading and others.

M. Inventories

Inventories shall include raw material, work-in-progress, finished goods,stock-in-trade, stores and spares, loose tools, goods-in-transit and others.

N. Trade receivables(i) The amounts shown under Trade Receivables shall include theamounts due in respect of goods sold or services rendered in the normalcourse of business.

(ii) The amounts shall be shown net of allowance for bad and doubtfuldebts.

O. Cash and cash equivalents


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(i) Cash shall include cash balance, cheques/drafts in hand and balanceswith banks in current accounts.

(ii) Cash equivalents shall include short-term, highly liquid investmentsthat are readily convertible into known amounts of cash and which aresubject to an insignificant risk of changes in value.

P. Short-term loans and advancesThe amounts shall be shown net of allowance for bad and doubtful loansand advances.

Q. Contingencies and commitments(to the extent not provided for)

(i) Contingencies shall be classified as:(a) Tax contingencies and law suits (except those where the likelihood of

an outflow of resources is remote).(b) Guarantees.(c) Other money for which the company is contingently liable (exceptthose where the likelihood of an outflow of resources is remote).

(ii) Commitments shall be classified as:(d) Estimated amount of contracts remaining to be executed on capitalaccount and not provided for.(e) Uncalled liability on shares partly paid.(f) Other commitments.

R. The amount of dividends proposed to be distributed to equity holdersfor the period and the related amount per share shall be disclosedseparately. Arrears of fixed cumulative dividends shall also be disclosedseparately.

BALANCE SHEET --HORIZENTAL

FORMAT


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COMPANY BALANCE SHEET

BALANCE SHEET OF ITC LIMITED AS ON 31.03.2008

balance sheet 1062

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