Balance Sheet Preparation as per the Company Act, 1956

According to the Company Act, 1956, the balance sheet of a company is prepared as per Part I and II of Schedule VI. Let's understand this answer in detail:

1. Company Act, 1956
The Company Act, 1956 is an important legislation that governs the functioning and operations of companies in India. It provides guidelines and regulations related to various aspects such as incorporation, management, accounts, and financial reporting of companies.

2. Schedule VI
Schedule VI of the Company Act, 1956 specifies the format and presentation requirements for financial statements of companies. It provides a standardized format for the preparation of the balance sheet, profit and loss account, and other financial statements.

3. Parts of Schedule VI
Schedule VI is divided into two parts:

a) Part I: Part I of Schedule VI deals with the form and content of the balance sheet. It provides the specific format and structure that companies need to follow while preparing their balance sheet. It includes various headings and sub-headings that must be included in the balance sheet along with the relevant information.

b) Part II: Part II of Schedule VI provides the general instructions for the preparation of balance sheet and profit and loss account. It includes guidelines related to the valuation of assets and liabilities, treatment of reserves and provisions, disclosure requirements, and other important aspects of financial reporting.

4. Balance Sheet Preparation
Based on the above information, the correct answer is option 'B' - the balance sheet of a company is prepared as per Part I and II of Schedule VI. This means that companies need to follow the specific format and structure mentioned in Part I of Schedule VI and comply with the general instructions provided in Part II while preparing their balance sheet.

Conclusion
The Company Act, 1956 mandates the preparation of financial statements in accordance with the guidelines specified in Schedule VI. The balance sheet of a company is prepared as per Part I and II of Schedule VI, which provide the specific format, structure, and instructions for presenting the financial position of the company.