Top ads from clicksor

Wednesday, April 27, 2011

Preparation of Balance Sheet

balance sheet of a non-trading organization is prepared in the same manner as the balance sheet of a business concern by showing assets on the right hand side and liabilities on the left hand side. It is prepared on the basis of last year's balance sheet, receipts and payment account, stock register kept for assets and the income and expenditure account. The following points should be noted while preparing balance sheet.
  • Capital Fund: The capital fund represent the excess amount of assets over the liabilities. It is determined by preparing opening balance sheet at the beginning of the year.
  • Surplus or Deficit: The surplus amount taken from income and expenditure account is added to the capital fund while preparing balance sheet at the end of yea. On the other hand, the amount of deficit is deducted from capital fund.
  • Cash and Bank Balance: The closing balances of cash and bank are shown on the assets side of balance sheet. However, opening balances are ignored.
  • Assets: Assets of opening balance sheet or last year are shown on the assets side of closing balance sheet. If there is any addition in current yea, it must be added and in case of sale, it is deducted. The depreciation made during the year is also adjusted in fixed assets.
  • New Assets: In case of purchase of any new assets, it is required to show on the assets side of balance sheet.
  • Liabilities: Outstanding expenses, advance income etc. are shown on the liability side of balance sheet. Previous year's liability should be adjusted for payments made.
  • Special Receipts: Special receipts are shown in balance sheet after making necessary adjustments.

No comments:

Post a Comment

Your Luck Goes Here

Search your luck

Search Term:


Add to Technorati Favorites