Format of Balance Sheet & Equity and Liabilities | Crash Course of Accountancy - Class 12 - Commerce PDF Download

 Page 1


 
    
 
Chapter 1  
Financial Statements of Companies 
 
Meaning of Financial statements 
? Financial statements are the end projects of accounting process.  
? They provide information about the profitability and the financial position of a business.  
? These statements include at least two statements: 
1. Income Statement or Statement of Profit & Loss 
2. Statement of Financial Position or Balance Sheet 
 
Meaning of Income Statement or Statement of Profit & Loss:  
It shows the net results of the 3business operations, i.e., net profit or loss during an accounting period. 
 
Meaning of Statement of Financial Position or Balance Sheet:  
It shows the nature and amount of assets, liabilities and capital of a business and indicates the financial position of the 
business at a particular date. 
 
Objectives of Preparing Financial Statements: 
(i) To present a true and fair view of the financial performance (i.e. profit/loss) of the business; 
(ii) To present a true and fair value of the financial position (i.e. Assets/Equity & Liabilities) of the business. 
 
Characteristics of Financial Statements 
(i) Financial statements are related to past period and hence are historical documents. 
(ii) They are expressed in terms of money. 
(iii) Financial Statements show profitability through Statement of Profit & Loss and financial position through 
Balance Sheet. 
FORMAT OF BALANCE SHEET 
 
Name of the company……………… 
Balance Sheet as at ……………… 
 
Particulars 
Note 
No. 
current  
year 
previous  
year 
1 2 3 4 
I. EQUITY AND LIABILITIES 
(1) Shareholder’s funds 
(a) Share Capital 
(b) Reserves and Surplus 
(c) Money received against share warrants 
(2) Share application money pending allotment 
(3) Non-current liabilities 
(a) Long-term borrowings 
(b) Deferred tax liabilities(net) 
(c) Other long-term liabilities 
(d) Long-term provisions 
(4) Current liabilities 
(a) Short-term borrowings 
(b) Trade payables 
(c) Other current liabilities 
(d) Short-term provisions 
TOTAL 
II. ASSETS 
(1) Non-current assets 
(a) Fixed Assets 
(i)Tangible assets 
(ii)Intangible assets 
(iii)Capital work-in-progress 
(iv)Intangible assets under development 
   
Page 2


 
    
 
Chapter 1  
Financial Statements of Companies 
 
Meaning of Financial statements 
? Financial statements are the end projects of accounting process.  
? They provide information about the profitability and the financial position of a business.  
? These statements include at least two statements: 
1. Income Statement or Statement of Profit & Loss 
2. Statement of Financial Position or Balance Sheet 
 
Meaning of Income Statement or Statement of Profit & Loss:  
It shows the net results of the 3business operations, i.e., net profit or loss during an accounting period. 
 
Meaning of Statement of Financial Position or Balance Sheet:  
It shows the nature and amount of assets, liabilities and capital of a business and indicates the financial position of the 
business at a particular date. 
 
Objectives of Preparing Financial Statements: 
(i) To present a true and fair view of the financial performance (i.e. profit/loss) of the business; 
(ii) To present a true and fair value of the financial position (i.e. Assets/Equity & Liabilities) of the business. 
 
Characteristics of Financial Statements 
(i) Financial statements are related to past period and hence are historical documents. 
(ii) They are expressed in terms of money. 
(iii) Financial Statements show profitability through Statement of Profit & Loss and financial position through 
Balance Sheet. 
FORMAT OF BALANCE SHEET 
 
Name of the company……………… 
Balance Sheet as at ……………… 
 
Particulars 
Note 
No. 
current  
year 
previous  
year 
1 2 3 4 
I. EQUITY AND LIABILITIES 
(1) Shareholder’s funds 
(a) Share Capital 
(b) Reserves and Surplus 
(c) Money received against share warrants 
(2) Share application money pending allotment 
(3) Non-current liabilities 
(a) Long-term borrowings 
(b) Deferred tax liabilities(net) 
(c) Other long-term liabilities 
(d) Long-term provisions 
(4) Current liabilities 
(a) Short-term borrowings 
(b) Trade payables 
(c) Other current liabilities 
(d) Short-term provisions 
TOTAL 
II. ASSETS 
(1) Non-current assets 
(a) Fixed Assets 
(i)Tangible assets 
(ii)Intangible assets 
(iii)Capital work-in-progress 
(iv)Intangible assets under development 
   
 
    
 
(b) Non-current investments 
(c) Deferred tax assets (net) 
(d) Long-term loans and advances 
(e) Other non-current assets 
(2) Current assets 
(a) Current investments 
(b) Inventories  
(c) Trade receivables 
(d) Cash and cash equivalents 
(e) Short-term loans and advances 
(f) Other current assets 
TOTAL 
 
Note: The Accounting treatment of the following items will not be examined:  
1. Money received against share warrants  
2. Share application money pending allotment  
3. Deferred tax liabilities (Net)  
4. Other Long term liabilities  
5. Capital work-in-progress 
6. Intangible assets under development  
7. Deferred tax assets (net)  
 
Explanation of Equity and Liabilities 
Notes to accounts 
 (a) Share Capital:  
Share Capital means shares issued by the company for subscription and  amount received against issued share capital. 
Share Capital includes both Equity Share Capital and Preference Share Capital. 
Balance Sheet shall disclose  
? authorised capital 
? issued capital  
? subscribed capital 
Under the head, ‘Share Capital’, some of the important items to be shown are as under:  
(i) Number and amount of shares authorized. 
(ii) Number of shares issued. Subscribed and fully paid up and subscribed but not fully paid up. 
(iii) Par value per share. 
(IV) Calls unpaid  
(v) Forfeited shares (amount originally paid up) 
 
Types of share capital to disclosed are – 
(i) Authorised Capital or Nominal Capital- 
? the maximum capital that a company can issue for subscription 
? It is stated in the Memorandum of Association of the company under Capital clause  
? It is divided into different classes of shares such as Equity Share Capital and Preference Share Capital. 
The amount of authorised capital is shown in the Notes to Accounts of Share Capital for information only. It is not added to 
the liability 
 
(ii) Issued Capital: 
? Issued Capital is that part of authorised capital which the company has issued for subscription up to the date of 
Balance Sheet 
? It should be kept in mind that Issued Capital can be equal to or less than the authorised capital. 
The amount of Issued Capital is shown in the Notes to Accounts on Share Capital for information only. It is not added to the 
liability. 
 
(iii) Subscribed Capital:  
? Subscribed Capital is that part of the issued capital which has been subscribed.  
? Amount received by the company on Subscribed Capital is shown as share capital on the face of the Balance 
Sheet. 
Page 3


 
    
 
Chapter 1  
Financial Statements of Companies 
 
Meaning of Financial statements 
? Financial statements are the end projects of accounting process.  
? They provide information about the profitability and the financial position of a business.  
? These statements include at least two statements: 
1. Income Statement or Statement of Profit & Loss 
2. Statement of Financial Position or Balance Sheet 
 
Meaning of Income Statement or Statement of Profit & Loss:  
It shows the net results of the 3business operations, i.e., net profit or loss during an accounting period. 
 
Meaning of Statement of Financial Position or Balance Sheet:  
It shows the nature and amount of assets, liabilities and capital of a business and indicates the financial position of the 
business at a particular date. 
 
Objectives of Preparing Financial Statements: 
(i) To present a true and fair view of the financial performance (i.e. profit/loss) of the business; 
(ii) To present a true and fair value of the financial position (i.e. Assets/Equity & Liabilities) of the business. 
 
Characteristics of Financial Statements 
(i) Financial statements are related to past period and hence are historical documents. 
(ii) They are expressed in terms of money. 
(iii) Financial Statements show profitability through Statement of Profit & Loss and financial position through 
Balance Sheet. 
FORMAT OF BALANCE SHEET 
 
Name of the company……………… 
Balance Sheet as at ……………… 
 
Particulars 
Note 
No. 
current  
year 
previous  
year 
1 2 3 4 
I. EQUITY AND LIABILITIES 
(1) Shareholder’s funds 
(a) Share Capital 
(b) Reserves and Surplus 
(c) Money received against share warrants 
(2) Share application money pending allotment 
(3) Non-current liabilities 
(a) Long-term borrowings 
(b) Deferred tax liabilities(net) 
(c) Other long-term liabilities 
(d) Long-term provisions 
(4) Current liabilities 
(a) Short-term borrowings 
(b) Trade payables 
(c) Other current liabilities 
(d) Short-term provisions 
TOTAL 
II. ASSETS 
(1) Non-current assets 
(a) Fixed Assets 
(i)Tangible assets 
(ii)Intangible assets 
(iii)Capital work-in-progress 
(iv)Intangible assets under development 
   
 
    
 
(b) Non-current investments 
(c) Deferred tax assets (net) 
(d) Long-term loans and advances 
(e) Other non-current assets 
(2) Current assets 
(a) Current investments 
(b) Inventories  
(c) Trade receivables 
(d) Cash and cash equivalents 
(e) Short-term loans and advances 
(f) Other current assets 
TOTAL 
 
Note: The Accounting treatment of the following items will not be examined:  
1. Money received against share warrants  
2. Share application money pending allotment  
3. Deferred tax liabilities (Net)  
4. Other Long term liabilities  
5. Capital work-in-progress 
6. Intangible assets under development  
7. Deferred tax assets (net)  
 
Explanation of Equity and Liabilities 
Notes to accounts 
 (a) Share Capital:  
Share Capital means shares issued by the company for subscription and  amount received against issued share capital. 
Share Capital includes both Equity Share Capital and Preference Share Capital. 
Balance Sheet shall disclose  
? authorised capital 
? issued capital  
? subscribed capital 
Under the head, ‘Share Capital’, some of the important items to be shown are as under:  
(i) Number and amount of shares authorized. 
(ii) Number of shares issued. Subscribed and fully paid up and subscribed but not fully paid up. 
(iii) Par value per share. 
(IV) Calls unpaid  
(v) Forfeited shares (amount originally paid up) 
 
Types of share capital to disclosed are – 
(i) Authorised Capital or Nominal Capital- 
? the maximum capital that a company can issue for subscription 
? It is stated in the Memorandum of Association of the company under Capital clause  
? It is divided into different classes of shares such as Equity Share Capital and Preference Share Capital. 
The amount of authorised capital is shown in the Notes to Accounts of Share Capital for information only. It is not added to 
the liability 
 
(ii) Issued Capital: 
? Issued Capital is that part of authorised capital which the company has issued for subscription up to the date of 
Balance Sheet 
? It should be kept in mind that Issued Capital can be equal to or less than the authorised capital. 
The amount of Issued Capital is shown in the Notes to Accounts on Share Capital for information only. It is not added to the 
liability. 
 
(iii) Subscribed Capital:  
? Subscribed Capital is that part of the issued capital which has been subscribed.  
? Amount received by the company on Subscribed Capital is shown as share capital on the face of the Balance 
Sheet. 
 
    
 
? Subscribed Capital is classified, i.e., shown under the following two heads: 
 1.Subscribed and fully paid; and 
 2.Subscribed but not fully paid. 
 
Subscribed and Fully Paid 
Shares are shown as ‘Subscribed and fully paid’ when both the following conditions are met: 
(i) the company has called the entire nominal (face) value of the share; and 
(ii) the company has received the amount called. 
(iii)  
Subscribed but Not Fully Paid 
Shares are shown as ‘Subscribed but not fully paid’ under the following two situations 
(i) The Company has Called the Entire Nominal (Face) Value of the Share but has not recieved the Amount Called. 
(ii) The Company has not Called the entire Nominal (Face) Value of the Share. 
 
Reserve Capital 
In case of company having Reserve Capital, the shares are shown as ‘Subscribed but not fully Paid’. These shares are shown 
as ‘Subscribed but not fully paid’ because the entire nominal (face) value has not been called by the company. 
 
Calls-in-Arrears 
Calls-in-Arrears means the amount not received by the company against the amount called-up by it towards share capital. 
Shares against which the calls are in arrear are shown under “Subscribed but not fully paid” at the amount received by 
the company against those shares. 
 
Calls-in-Advance 
A company, if its Articles of Association permit, may receive amount against calls not yet made. The amount so received is 
called ‘Calls-in-Advance’. It is classified or shown in the Balance Sheet as ‘Other Current Liabilities’ under ‘Current Liabilities’. 
 
FORMAT OF BALANCE SHEET as at ………. 
Particulars Note 
no. 
Rs. 
ii. Equity and liabilities 
b. Share-holders fund 
(ii) Share capital 
 
 
1 
 
 
 
 
Notes to accounts      
 
  
 
 
   Rs.     Rs.   
(1) Share Capital   
 
   
Authorised Capital :       
............................ Equity Shares of Rs. ....... each       
............................ Preference Shares of Rs. ....... 
each  
     
Issued Capital :   
 
   
............................ Equity Shares of Rs..... each       
............................ Preference Shares of Rs. ....... 
each  
     
Subscribed and Fully Paid Capital :   
 
   
............................ Equity Shares of Rs. ....... each       
............................ Preference Shares of Rs. ....... 
each  
     
(Of the above shares .............. Shares are allotted as fully paid-
up  
    
pursuant to a contract without payments being received in 
cash)  
    
Subscribed but not fully paid Capital:       
...... Shares of Rs. ....... each, Rs ......... per share 
Called-up  
     
Less:  Calls in Arrears :       
 (i)  By Directors and Officers of the 
Company  
     
 (ii)  By Others       
Add:  Forfeited shares:       
Page 4


 
    
 
Chapter 1  
Financial Statements of Companies 
 
Meaning of Financial statements 
? Financial statements are the end projects of accounting process.  
? They provide information about the profitability and the financial position of a business.  
? These statements include at least two statements: 
1. Income Statement or Statement of Profit & Loss 
2. Statement of Financial Position or Balance Sheet 
 
Meaning of Income Statement or Statement of Profit & Loss:  
It shows the net results of the 3business operations, i.e., net profit or loss during an accounting period. 
 
Meaning of Statement of Financial Position or Balance Sheet:  
It shows the nature and amount of assets, liabilities and capital of a business and indicates the financial position of the 
business at a particular date. 
 
Objectives of Preparing Financial Statements: 
(i) To present a true and fair view of the financial performance (i.e. profit/loss) of the business; 
(ii) To present a true and fair value of the financial position (i.e. Assets/Equity & Liabilities) of the business. 
 
Characteristics of Financial Statements 
(i) Financial statements are related to past period and hence are historical documents. 
(ii) They are expressed in terms of money. 
(iii) Financial Statements show profitability through Statement of Profit & Loss and financial position through 
Balance Sheet. 
FORMAT OF BALANCE SHEET 
 
Name of the company……………… 
Balance Sheet as at ……………… 
 
Particulars 
Note 
No. 
current  
year 
previous  
year 
1 2 3 4 
I. EQUITY AND LIABILITIES 
(1) Shareholder’s funds 
(a) Share Capital 
(b) Reserves and Surplus 
(c) Money received against share warrants 
(2) Share application money pending allotment 
(3) Non-current liabilities 
(a) Long-term borrowings 
(b) Deferred tax liabilities(net) 
(c) Other long-term liabilities 
(d) Long-term provisions 
(4) Current liabilities 
(a) Short-term borrowings 
(b) Trade payables 
(c) Other current liabilities 
(d) Short-term provisions 
TOTAL 
II. ASSETS 
(1) Non-current assets 
(a) Fixed Assets 
(i)Tangible assets 
(ii)Intangible assets 
(iii)Capital work-in-progress 
(iv)Intangible assets under development 
   
 
    
 
(b) Non-current investments 
(c) Deferred tax assets (net) 
(d) Long-term loans and advances 
(e) Other non-current assets 
(2) Current assets 
(a) Current investments 
(b) Inventories  
(c) Trade receivables 
(d) Cash and cash equivalents 
(e) Short-term loans and advances 
(f) Other current assets 
TOTAL 
 
Note: The Accounting treatment of the following items will not be examined:  
1. Money received against share warrants  
2. Share application money pending allotment  
3. Deferred tax liabilities (Net)  
4. Other Long term liabilities  
5. Capital work-in-progress 
6. Intangible assets under development  
7. Deferred tax assets (net)  
 
Explanation of Equity and Liabilities 
Notes to accounts 
 (a) Share Capital:  
Share Capital means shares issued by the company for subscription and  amount received against issued share capital. 
Share Capital includes both Equity Share Capital and Preference Share Capital. 
Balance Sheet shall disclose  
? authorised capital 
? issued capital  
? subscribed capital 
Under the head, ‘Share Capital’, some of the important items to be shown are as under:  
(i) Number and amount of shares authorized. 
(ii) Number of shares issued. Subscribed and fully paid up and subscribed but not fully paid up. 
(iii) Par value per share. 
(IV) Calls unpaid  
(v) Forfeited shares (amount originally paid up) 
 
Types of share capital to disclosed are – 
(i) Authorised Capital or Nominal Capital- 
? the maximum capital that a company can issue for subscription 
? It is stated in the Memorandum of Association of the company under Capital clause  
? It is divided into different classes of shares such as Equity Share Capital and Preference Share Capital. 
The amount of authorised capital is shown in the Notes to Accounts of Share Capital for information only. It is not added to 
the liability 
 
(ii) Issued Capital: 
? Issued Capital is that part of authorised capital which the company has issued for subscription up to the date of 
Balance Sheet 
? It should be kept in mind that Issued Capital can be equal to or less than the authorised capital. 
The amount of Issued Capital is shown in the Notes to Accounts on Share Capital for information only. It is not added to the 
liability. 
 
(iii) Subscribed Capital:  
? Subscribed Capital is that part of the issued capital which has been subscribed.  
? Amount received by the company on Subscribed Capital is shown as share capital on the face of the Balance 
Sheet. 
 
    
 
? Subscribed Capital is classified, i.e., shown under the following two heads: 
 1.Subscribed and fully paid; and 
 2.Subscribed but not fully paid. 
 
Subscribed and Fully Paid 
Shares are shown as ‘Subscribed and fully paid’ when both the following conditions are met: 
(i) the company has called the entire nominal (face) value of the share; and 
(ii) the company has received the amount called. 
(iii)  
Subscribed but Not Fully Paid 
Shares are shown as ‘Subscribed but not fully paid’ under the following two situations 
(i) The Company has Called the Entire Nominal (Face) Value of the Share but has not recieved the Amount Called. 
(ii) The Company has not Called the entire Nominal (Face) Value of the Share. 
 
Reserve Capital 
In case of company having Reserve Capital, the shares are shown as ‘Subscribed but not fully Paid’. These shares are shown 
as ‘Subscribed but not fully paid’ because the entire nominal (face) value has not been called by the company. 
 
Calls-in-Arrears 
Calls-in-Arrears means the amount not received by the company against the amount called-up by it towards share capital. 
Shares against which the calls are in arrear are shown under “Subscribed but not fully paid” at the amount received by 
the company against those shares. 
 
Calls-in-Advance 
A company, if its Articles of Association permit, may receive amount against calls not yet made. The amount so received is 
called ‘Calls-in-Advance’. It is classified or shown in the Balance Sheet as ‘Other Current Liabilities’ under ‘Current Liabilities’. 
 
FORMAT OF BALANCE SHEET as at ………. 
Particulars Note 
no. 
Rs. 
ii. Equity and liabilities 
b. Share-holders fund 
(ii) Share capital 
 
 
1 
 
 
 
 
Notes to accounts      
 
  
 
 
   Rs.     Rs.   
(1) Share Capital   
 
   
Authorised Capital :       
............................ Equity Shares of Rs. ....... each       
............................ Preference Shares of Rs. ....... 
each  
     
Issued Capital :   
 
   
............................ Equity Shares of Rs..... each       
............................ Preference Shares of Rs. ....... 
each  
     
Subscribed and Fully Paid Capital :   
 
   
............................ Equity Shares of Rs. ....... each       
............................ Preference Shares of Rs. ....... 
each  
     
(Of the above shares .............. Shares are allotted as fully paid-
up  
    
pursuant to a contract without payments being received in 
cash)  
    
Subscribed but not fully paid Capital:       
...... Shares of Rs. ....... each, Rs ......... per share 
Called-up  
     
Less:  Calls in Arrears :       
 (i)  By Directors and Officers of the 
Company  
     
 (ii)  By Others       
Add:  Forfeited shares:       
 
    
 
IIIustration 
X Ltd. has an Authorized capital of ` 15,00,000 divided into 1,00,000 Equity shares of `10 each and 50,000 9% preference 
share of ` 10 each .  
The company invited applications for all the preference shares but only 90,000 equity shares.  
All the preference shares were subscribed, called and paid while subscriptions were received for only 85,000 equity 
shares.  
During the first year ` 8 per share were called.  
Ram holding 1,000 shares and Shyam holding 2,000 shares did not pay first call of `2.  
Shyam’s shares were forfeited after the first call and later on 1,500 of the forfeited shares were reissued at `6 per share `8 
called up.  
(a) Show share capital in the Balance Sheet as per revised Schedule VI as at 31st March 2013.  
(b) Prepare relevant ‘Notes to Accounts 
Solution 
 
 
 
Reserves and Surplus: 
The following items are shown under this head: (sssscco) 
(i) Securities Premium Reserve; 
(ii) Sinking fund Debenture Redemption Reserve 
 (iii) Surplus i.e. balance in Statement of Profit & Loss  Now the Dr. Balance of Statement of Profit & Loss will be disclosed 
under the head. ‘Reserve & Surplus’ as the negative figure  
Page 5


 
    
 
Chapter 1  
Financial Statements of Companies 
 
Meaning of Financial statements 
? Financial statements are the end projects of accounting process.  
? They provide information about the profitability and the financial position of a business.  
? These statements include at least two statements: 
1. Income Statement or Statement of Profit & Loss 
2. Statement of Financial Position or Balance Sheet 
 
Meaning of Income Statement or Statement of Profit & Loss:  
It shows the net results of the 3business operations, i.e., net profit or loss during an accounting period. 
 
Meaning of Statement of Financial Position or Balance Sheet:  
It shows the nature and amount of assets, liabilities and capital of a business and indicates the financial position of the 
business at a particular date. 
 
Objectives of Preparing Financial Statements: 
(i) To present a true and fair view of the financial performance (i.e. profit/loss) of the business; 
(ii) To present a true and fair value of the financial position (i.e. Assets/Equity & Liabilities) of the business. 
 
Characteristics of Financial Statements 
(i) Financial statements are related to past period and hence are historical documents. 
(ii) They are expressed in terms of money. 
(iii) Financial Statements show profitability through Statement of Profit & Loss and financial position through 
Balance Sheet. 
FORMAT OF BALANCE SHEET 
 
Name of the company……………… 
Balance Sheet as at ……………… 
 
Particulars 
Note 
No. 
current  
year 
previous  
year 
1 2 3 4 
I. EQUITY AND LIABILITIES 
(1) Shareholder’s funds 
(a) Share Capital 
(b) Reserves and Surplus 
(c) Money received against share warrants 
(2) Share application money pending allotment 
(3) Non-current liabilities 
(a) Long-term borrowings 
(b) Deferred tax liabilities(net) 
(c) Other long-term liabilities 
(d) Long-term provisions 
(4) Current liabilities 
(a) Short-term borrowings 
(b) Trade payables 
(c) Other current liabilities 
(d) Short-term provisions 
TOTAL 
II. ASSETS 
(1) Non-current assets 
(a) Fixed Assets 
(i)Tangible assets 
(ii)Intangible assets 
(iii)Capital work-in-progress 
(iv)Intangible assets under development 
   
 
    
 
(b) Non-current investments 
(c) Deferred tax assets (net) 
(d) Long-term loans and advances 
(e) Other non-current assets 
(2) Current assets 
(a) Current investments 
(b) Inventories  
(c) Trade receivables 
(d) Cash and cash equivalents 
(e) Short-term loans and advances 
(f) Other current assets 
TOTAL 
 
Note: The Accounting treatment of the following items will not be examined:  
1. Money received against share warrants  
2. Share application money pending allotment  
3. Deferred tax liabilities (Net)  
4. Other Long term liabilities  
5. Capital work-in-progress 
6. Intangible assets under development  
7. Deferred tax assets (net)  
 
Explanation of Equity and Liabilities 
Notes to accounts 
 (a) Share Capital:  
Share Capital means shares issued by the company for subscription and  amount received against issued share capital. 
Share Capital includes both Equity Share Capital and Preference Share Capital. 
Balance Sheet shall disclose  
? authorised capital 
? issued capital  
? subscribed capital 
Under the head, ‘Share Capital’, some of the important items to be shown are as under:  
(i) Number and amount of shares authorized. 
(ii) Number of shares issued. Subscribed and fully paid up and subscribed but not fully paid up. 
(iii) Par value per share. 
(IV) Calls unpaid  
(v) Forfeited shares (amount originally paid up) 
 
Types of share capital to disclosed are – 
(i) Authorised Capital or Nominal Capital- 
? the maximum capital that a company can issue for subscription 
? It is stated in the Memorandum of Association of the company under Capital clause  
? It is divided into different classes of shares such as Equity Share Capital and Preference Share Capital. 
The amount of authorised capital is shown in the Notes to Accounts of Share Capital for information only. It is not added to 
the liability 
 
(ii) Issued Capital: 
? Issued Capital is that part of authorised capital which the company has issued for subscription up to the date of 
Balance Sheet 
? It should be kept in mind that Issued Capital can be equal to or less than the authorised capital. 
The amount of Issued Capital is shown in the Notes to Accounts on Share Capital for information only. It is not added to the 
liability. 
 
(iii) Subscribed Capital:  
? Subscribed Capital is that part of the issued capital which has been subscribed.  
? Amount received by the company on Subscribed Capital is shown as share capital on the face of the Balance 
Sheet. 
 
    
 
? Subscribed Capital is classified, i.e., shown under the following two heads: 
 1.Subscribed and fully paid; and 
 2.Subscribed but not fully paid. 
 
Subscribed and Fully Paid 
Shares are shown as ‘Subscribed and fully paid’ when both the following conditions are met: 
(i) the company has called the entire nominal (face) value of the share; and 
(ii) the company has received the amount called. 
(iii)  
Subscribed but Not Fully Paid 
Shares are shown as ‘Subscribed but not fully paid’ under the following two situations 
(i) The Company has Called the Entire Nominal (Face) Value of the Share but has not recieved the Amount Called. 
(ii) The Company has not Called the entire Nominal (Face) Value of the Share. 
 
Reserve Capital 
In case of company having Reserve Capital, the shares are shown as ‘Subscribed but not fully Paid’. These shares are shown 
as ‘Subscribed but not fully paid’ because the entire nominal (face) value has not been called by the company. 
 
Calls-in-Arrears 
Calls-in-Arrears means the amount not received by the company against the amount called-up by it towards share capital. 
Shares against which the calls are in arrear are shown under “Subscribed but not fully paid” at the amount received by 
the company against those shares. 
 
Calls-in-Advance 
A company, if its Articles of Association permit, may receive amount against calls not yet made. The amount so received is 
called ‘Calls-in-Advance’. It is classified or shown in the Balance Sheet as ‘Other Current Liabilities’ under ‘Current Liabilities’. 
 
FORMAT OF BALANCE SHEET as at ………. 
Particulars Note 
no. 
Rs. 
ii. Equity and liabilities 
b. Share-holders fund 
(ii) Share capital 
 
 
1 
 
 
 
 
Notes to accounts      
 
  
 
 
   Rs.     Rs.   
(1) Share Capital   
 
   
Authorised Capital :       
............................ Equity Shares of Rs. ....... each       
............................ Preference Shares of Rs. ....... 
each  
     
Issued Capital :   
 
   
............................ Equity Shares of Rs..... each       
............................ Preference Shares of Rs. ....... 
each  
     
Subscribed and Fully Paid Capital :   
 
   
............................ Equity Shares of Rs. ....... each       
............................ Preference Shares of Rs. ....... 
each  
     
(Of the above shares .............. Shares are allotted as fully paid-
up  
    
pursuant to a contract without payments being received in 
cash)  
    
Subscribed but not fully paid Capital:       
...... Shares of Rs. ....... each, Rs ......... per share 
Called-up  
     
Less:  Calls in Arrears :       
 (i)  By Directors and Officers of the 
Company  
     
 (ii)  By Others       
Add:  Forfeited shares:       
 
    
 
IIIustration 
X Ltd. has an Authorized capital of ` 15,00,000 divided into 1,00,000 Equity shares of `10 each and 50,000 9% preference 
share of ` 10 each .  
The company invited applications for all the preference shares but only 90,000 equity shares.  
All the preference shares were subscribed, called and paid while subscriptions were received for only 85,000 equity 
shares.  
During the first year ` 8 per share were called.  
Ram holding 1,000 shares and Shyam holding 2,000 shares did not pay first call of `2.  
Shyam’s shares were forfeited after the first call and later on 1,500 of the forfeited shares were reissued at `6 per share `8 
called up.  
(a) Show share capital in the Balance Sheet as per revised Schedule VI as at 31st March 2013.  
(b) Prepare relevant ‘Notes to Accounts 
Solution 
 
 
 
Reserves and Surplus: 
The following items are shown under this head: (sssscco) 
(i) Securities Premium Reserve; 
(ii) Sinking fund Debenture Redemption Reserve 
 (iii) Surplus i.e. balance in Statement of Profit & Loss  Now the Dr. Balance of Statement of Profit & Loss will be disclosed 
under the head. ‘Reserve & Surplus’ as the negative figure  
 
    
 
 (iv) Share Options Outstanding Account (Accounting Treatment Not to be evaluated); 
(v) Capital Reserves;  
(vi) Capital Redemption Reserve;   
 (vii) Other reserve (restricted to General Reserve only);  
 
(3) Non-current liabilities: 
A non-current Liability is a liability which is not classified as current-liability.  
(a) Long Term borrowing 
(i) Debentures  
(ii) Bonds / public deposits  
(iii) Long Term Loans  
(d) Long Term provisions: 
All provisions for which the related claims are expected to be settled beyond 12 months  
(i) Provision for Retirement benefits like Provision for Provident Fund 
(ii) Provision for Warranties or Provision for Warranty Claims 
 
Other Long-term Liabilities 
'Other Long-term Liabilities' will not be evaluated. However, its presentation in the Balance Sheet can be asked. 
 
Long term Liabilities other than long term Borrowings are classified as Other long term Liabilities.  
They are classified into: 
(i) Trade Payables:  
A trade payable refers to the amount due on account of goods purchased or services rendered in the normal course of 
business. It includes both creditors and bills payable. 
Note: Trade Payables arc classified as 'Other Long-term Liabilities' when they are agreed to be settled after 12 months of the 
date of Balance Sheet or after the period of Operating Cycle. 
(ii) Others. Examples are: 
(i) Premium Payable on Redemption of Debentures (provided debentures are show as long term Borrowings). 
(ii) Premium payable on Redemption of Preference Shares (provided Performance (sic) after 12 months of the date of 
Balance Sheet or after the period of Operating Cycle). 
 
Current Liabilities: 
 A liability is classified as current when it satisfies any one of the following conditions:  
(i) It is expected to be settled in the company’s normal operating cycle. Operating cycle means the time between the 
acquisition of assets for processing and their realization in cash or cash equivalents. It may vary from few days to few 
years. Where the operating cycle cannot be identified, it is assumed to have duration of 12 months.  
(ii) It is held for the purpose of being traded.  
(iii) It is due to be settled within 12 months after the reporting date.  
 
(a) Short-term Borrowings: 
(i) Loans repayable on demand; ( bank over draft) 
• from Banks 
• from Other Parties 
(ii) Loans and Advances from related parties; 
(iii) Deposits; 
(iv) Other Loans and Advances (Nature to be specified).  
 
(b) Trade Payables:  
A trade payable refers to the amount due on account of goods purchased or services rendered in the normal course of 
business.  
(i) creditors  
(ii) bills payable.  
 
(c) Other Current Liabilities:  
(i) Current Maturities of Long-term Debts 
(ii) Calls-in-Advance  
(iii)  Interest accrued but not due on borrowings 
(iv) Interest accrued and due on borrowings