Format of Balance Sheet:
• Introduction:
The balance sheet is a financial statement that provides a snapshot of a company's financial position at a specific point in time. It shows the company's assets, liabilities, and shareholders' equity.
• Classification of Accounts:
The balance sheet of banking companies follows the classification of accounts prescribed by regulatory authorities like the Reserve Bank of India (RBI). Assets and liabilities are classified into categories such as cash and balances with the Reserve Bank, loans and advances, investments, deposits, borrowings, and shareholders' funds.
• Assets:
- Cash and Balances with Reserve Bank
- Balances with Banks and Money at Call and Short Notice
- Investments
- Advances
- Fixed Assets
- Other Assets
• Liabilities:
- Borrowings
- Deposits
- Other Liabilities and Provisions
- Contingent Liabilities
• Shareholders' Equity:
- Share Capital
- Reserves and Surplus
• Arrangement of Items:
Assets are listed on the left-hand side of the balance sheet, and liabilities and shareholders' equity are shown on the right-hand side. The total assets must equal the total liabilities and shareholders' equity, following the fundamental accounting equation (Assets = Liabilities + Shareholders' Equity).
• Additional Disclosures:
In addition to the main categories of assets, liabilities, and shareholders' equity, banking companies may also provide additional disclosures such as notes to the financial statements, which provide more detailed information about specific items on the balance sheet.
In conclusion, the format of the balance sheet for banking companies follows a specific classification of accounts as prescribed by regulatory authorities, with assets, liabilities, and shareholders' equity presented in a structured manner to provide a clear overview of the company's financial position.