Balance Sheet Format (Schedule III) & Meaning
Definition
A balance sheet is a statement of what a business owns (assets) and what it owes (liabilities and owners' equity) on a particular date. Total assets always equal total equity plus liabilities.
| Term | Balance sheet |
|---|---|
| In Hindi | तुलन पत्र (बैलेंस शीट) |
| Area | Accounting |
| Search phrase | balance sheet format |
| Try it | P&L account format |
तुलन पत्र (बैलेंस शीट) — हिंदी में अर्थ
बैलेंस शीट किसी तारीख पर व्यवसाय की संपत्तियों (assets) और देनदारियों व पूंजी (liabilities और equity) का विवरण है। कुल संपत्ति हमेशा कुल पूंजी व देनदारियों के बराबर होती है।
Balance sheet format (Schedule III, Companies Act 2013)
I. Equity and liabilities: (1) Shareholders' funds — share capital, reserves and surplus; (2) Non-current liabilities — long-term borrowings, long-term provisions; (3) Current liabilities — short-term borrowings, trade payables, other current liabilities, short-term provisions.
II. Assets: (1) Non-current assets — property, plant and equipment, intangible assets, capital work-in-progress, non-current investments, long-term loans and advances; (2) Current assets — inventories, trade receivables, cash and cash equivalents, short-term loans and advances, other current assets.
Simple format for a proprietor or partnership
Liabilities side: capital (plus profit, less drawings), loans, creditors, outstanding expenses. Assets side: machinery, furniture, stock, debtors, cash and bank, prepaid expenses. Both sides must total the same.
Example
Capital ₹20 lakh + loan ₹10 lakh + creditors ₹5 lakh = ₹35 lakh liabilities; machinery ₹18 lakh + stock ₹8 lakh + debtors ₹6 lakh + bank ₹3 lakh = ₹35 lakh assets.
Related tools and guides
Frequently asked questions
What is a balance sheet?
A statement of a business's assets, liabilities and equity on a given date. Assets = Liabilities + Equity.
What is the format of a balance sheet for companies?
Schedule III of the Companies Act, 2013: Equity and liabilities (shareholders' funds, non-current and current liabilities) and Assets (non-current and current).
What is the difference between a balance sheet and a P&L account?
The balance sheet shows position on a date; the profit and loss account shows income and expenses over a period.
Why must a balance sheet balance?
Because every transaction is recorded with equal debits and credits, so what the business owns is always financed by what it owes or what its owners put in.
Related terms
- Accounts receivableAccounts receivable is the money customers owe a business for goods or services already supplied on credit. It is shown as trade receivables (debtors) under current assets.
- Accrual vs cash basis of accountingUnder the accrual (mercantile) basis, income and expenses are recorded when they are earned or incurred, whatever the payment date. Under the cash basis, they are recorded only when cash is actually received or paid.
- Cash conversion cycleThe cash conversion cycle (CCC) is the number of days between paying for raw material and collecting cash from the customer for the finished goods: days inventory outstanding plus days sales outstanding minus days payables outstanding.
- Contra entryA contra entry is a transaction between cash and bank accounts of the same business — such as cash deposited into the bank or cash withdrawn for office use — where both the debit and the credit side are cash or bank.
- Contribution marginContribution margin is selling price minus variable cost. It is the amount each sale contributes first towards fixed costs and then to profit; as a percentage of sales it is called the contribution margin ratio or P/V ratio.
- Cost of goods sold (COGS)Cost of goods sold (COGS) is the direct cost of the goods a business sold in a period: Opening stock + Purchases + Direct expenses − Closing stock.