,

Analysis of Financial Sta te me nts - cas I

1.26 EXII
L . b'['t . ')
• n 5 (Classification of 'Current ta t t tes .
.ho I •

Ill us tra and Liabi}'.

de r the ,he ad 'C ur ren t Liabilities~ in the Equity
Na me the su b- he ad s .un . Ities Part
he du le III.
~f the Balance Sheet as pe r Sc
s·o lut ion :
(i) Short-term Borrowings,
(ii) Tr ad e Payables,
an d
(iii) Ot he r Cu rre nt Liabilities,
(iv) Short-term Provisions.
Ill_ustration 6 (Reserves and
Surplus) . hedule III.
t are sh ow n un de r Re ser ves ap d Su rp lus as pe r Sc
Na me any five items tha
Solution:
(i) Capital Reserve,
serve,
(ii) Capital Redemption Re
. (iii ) Securities Pr em ium
Reserve,
n Reserve (DRR), an d
(iv) Debentures Re de mp tio
t (v) Revaluation Reserve.
Ill us tra tio n 7 (Long-term Bo
rrowings). le III.
sh ow n un de r Lo ng -te rm Borr~wings as pe r Schedu
are
Name any four ite ms tha t
Solution :
(i) Debentures/Bopds,
he r parties,
(ii) Term-loan frorri ba nk /ot
(iii) Public Deposits, an d
(iv) Long-_term Loans an
d Advances.

Illustration 8 (Other Current

Liabilities). Ill.
n un de r Ot he r Cu rre nt Liabilities as pe r Schedule
are sh ow
· Name any five items tha t
·Solution:
(i) Current Maturities of
Long-term Debts,
(ii) Interest Accrued bu t
no t du e on Borrowings,
(iii ) Interest Accrued an
d du e on Borrowings,
(iv) Share Application Mo
ney (Refundable), an d
(v) Calls-in-Advance.
Illustration 9. of a company as
the fol low ing ite ms sh ow n in the Balance Sh ee t
Under which heads are
pe r Schedule III?
(i) Forfeited Shares Acco
unt,
(ii) Proposed Dividend,
an d
(iii) Unclaimed Dividend,
ive Dividend.
(iv) Arrears of Fixed Cumulat
Solution: t A ts
nt is ad de d to the 'Su bs cribed Ca pit al' in th e N o te o ccoun
(i) Forfeited Shares Accou
on Share Capital. t A
vid end is sho wn as Co nti ngen t Liability in the N o tes o cco un ts.
(ii) Proposed Di
 financial Statements of a Company 1.27
•'') Unclaimed Dividend is shown as Other Current Liabilities under the main head Current
(!It Liabilities in the Equity and Liabilities part of the Balance Sheet.
(iv) Arrears of Fixed Cumulative Dividend is shown as Contingent Liability in the Notes
to Accounts. . '

u1ustration 10. . . . ..
hich main head and sub-head of Eqmty and L1ab1hties are the following items
under w
• a company's Balance Sheet as per Schedule III?
shown [Link] . .
, (i) Debentures, .
(ii) Public Deposits:
"') Securities Premmm Reserve,
{tU
(iv) Capital Reserve, .
(v) Forfeited Shares Account,
(m . Accrued and .due on Debentures,
') Interest .
(viz) Bills Payable, ·
(viii) Advances Received from·.customers,
(ix) Sundry Creditors, and ··
(x) Premi,um on ~edemption of Debentures.

SouI tion-
- MainHead ' Sub-head
[Link]. Item
- Debentures Non-current Liabilities · Long-term Borrowings
(i)
(ii) Public Deposits Non-current Liabilities Long-term Borrowings

(iii) Securities Premium Reserve Shareholders' Funds · Reserves and Surplus

(iv} capital Reserve Shareholders' Funds Reserves and-Surplus
(v) Forfeited Shares Account Shareholders' Funds Subscribed Capital (Shown by way of addition)
(vi) Interest Accrued and due Current Liabilities Other Current' Liabilities
onDebentures
(vii) Bills Payable Current Liabilities Trade Payables
(viii) Advances Received from Current Liabilities Other Current Liabilities
Customers
(ix} Sundry Creditors Current Liabilities Trade Payables
(x) Premium on Redempti~n Non-current Liabilities Other Long-term Liabilities
of Debentures .
Illustration 11.
Under which main heads and sub-heads of Equity and Liabilities part of the Balance Sheet
as per Schedule III of the Companies Act, 2013 are the following items shown?
{i) · Interest Accrued and due on Secured Loans,
(ii) Interest Accrued but not due on Unsecured Loans
(~ii) Debentures Redemption Reserve, '
(iv) Capital Redemption Reserve,
(~) Advances from Customers (Long-term), and
(vi) Employees Provident Fund Payable.
-
Analysis of Financia l Sta t .
ernents- cas r-i: x,,
1.28

So lution: Sub-head
Main Head
- - Current Lia b'llt
I ie
' s
S. No. Item
~ ~ .t --- - -- -. --
(i) Interest Accrued and due on
_. :_ _- - - - b'f't
- rent Lia ' s
11 ie Other Current Liabilities
Secured Loans Cur
(ii) Interest Accrued but not due on
Shareholders' Funds Reserves and Surplus
Unsecured Loans
Shareholders' Funds Reserves and Surplus
(iii) Debentures Redemption Reserve
nt Liabilities Other Long- erm Liabilities
(iv) Capital Redemption Reserve
(L term) Non-curre
ers ong- Current Liabilities Other C rent Liabilities
(v) Advance s from Custom
(vi) Employees Provident Fund Payable
·
·11 b h ow n rn ·
on 12. ms w1 es a com pany's Balan ce
Illustr ati . h the following ite . 2013 :
r wh ic t I of the Comp. Ac t, ,
. h ds undeIII an ies
Give ma1or ea edule ' par
Sheet as per Sch
(i) Trade Payables,
(ii) Provision for Tax, fit an d Loss (Dr.),
... .z.e., Balarice in Statement of Pro
(m) Surplus,
ent of Profit an d Loss (Cr.),
(iv) Surplus, i.·e., Balance in Statem
(v) Proposed Dividend, and
(vi) Uncalled liability on sha
res.

Solution : Sub-head
Major Head .
[Link]. Item Trade Payables
Current Liabilities
{i) Trade Payables Short-term Provisions
Currerit Liabilities
(ii) Provision for Tax Reserves and Surplus
Shareholders' Funds
(iii) Surplus, i.e., Balance in Statement (As negative amount)
of Profit and Loss (Dr.) Reserves and Surplus
in Statem ent Sha reho lders' Funds
(iv) Surplus, i.e., Balan~e
of Profit and Loss (Cr.)
ility and is shown in the Notes to
Accounts.
{v) Proposed Dividend is aContingent liab
es t~ Accounts.
commitment and is shown in the Not
{vi) Uncalled liability on shares is a capital
II. ASSETS
div ide d int o no n-c urr en t ass ets an d cu rre nt assets . .
o
Assets, like liabilities, are als nn er in Sc hed ule III of the C~mpanies Act, 201
3
in a neg ativ e ma
Non-current assets is defined ."
as· "Non-current assets are those
assets which are not current assets
nt to understand
ent assets are def ine d in a negative manner, it is im po rta
Since non-curr
the meaning of current assets. follows:
def ine d in Sc hed ule III of the Companies Act, 2013 as
Current Assets are
Current As set s are those ass
ets which are:
company's
be realise d in or int end ed for sale or co nsu mp tio n in the
(i) expected to -
normal operating cycle; or
se of trading; or
(ii) held primarily for the purpo
thi n 12 mo nth s from the rep orting date, i.e., Balance Sh eet
(iii) expected to be realised .
wi
date; or
 ;nancial Statem ents of a Company 1.29
f
• h d
and Cash Equiv alents unles s they are restric ted from b emg exc ange or
(1·v) Cash
d t •
used to settle a liabili ty for at least 12 month s after the report in g a e, t.e., 8 a 1ance
Sheet date. ~

tions, let .us recapi tulate the meaniung of th term Operati_·ng

r. re we discuss the above condi
. • e
I3e10
of classif ication of Liabilities
cycle. It has the same meam n~ a~ -~as discus sed at the time
Page 1.17 of this Chapt er ·
iJ1tO n On-curre nt and curren t hab1hbes on
.
Operating Cycle

2013 as follows:
operating Cycle is defined in Schedule Ill of the Companies Act,
their realisation in
-operating Cycle is the time between th~ acquisition of assets for processing and
it is assumed to be of 12 months:'
cash or cash Equivalents. If operating cycle cannot be identified,

Let us now discuss the above conditions in detail.

(i) Expected to be Realised in or Intended for Sale or Consumption
in the Company's Normal
Operating Cycle
of the business
Assets that are expected to be realised within the normal Operating Cycle
of a business is
- are classified or shown as current assets. For example, Opera ting Cycle
month s. Asset s that are expected to be realised within 18 mont hs from the date of
18
are expected to be
Balance Sheet are classified or show n as current assets. Assets that
n the opera ting
realised after 18 months from the date of Balance Sheet (i.e., not withi
period) are classified or shown as non-current assets.
(ii) Held Primarily for the Purpose of Trading"
An asset is classified or show n .as current asset if it is held for
the purpo se of tracHng.
es stock of raw
Thus, inventory is classified or show n as current ~sset. Inventory includ
, loose to9ls, etc.
material, finished goods, goods purch ased for sale, stores and spare~
(iii) Expected to be Realised within 12 Months from the Reporting Date,
i.e., Balance Sheet Date
hs from the date
Assets · that are expected to be realised withi n a perio d of 12 mont
exam ple, opera ting
of Balance Sheet are classified or show n as ~urre nt assets. For
realis ed withi n
cycle of a business is 7 mont hs. Asset s that are expec ted to be
ting . cycle bei!}g of
12 months of the date of Balance Sheet, irresp ective of the opera
7 months, assets of that business are classified or show n as curre nt assets.

(iv) Cash and Cash Equivalents Unless they are Restricted from being Excha
nged or Used to Settle
a Liability for at least 12 Months after the Reporting Date, i.e., Balance ·sheet Date
. However, if
Cash and Cash Equivalents are always classified or show n as curre nt assets
. t·
there are res tnc h . . but as
10ns on t e1r use, they are not classified or show n as curre nt assets
. a company has balance m . a bank outsid. e the country
non-current asse ts. For exampIe, 1f
nd th balance with
: at country has restricted transfer of amou nt outsid e the country, such
ank is classified or shown as non-c urren t asset.
1.30 An·afysis of Financial Statements - CBS EXII

Illu stra tion 13.

ent assets
eivables) into non -cu rren t assets and curr
Classify the following Assets (Trade Rec
and give reasons for such classification-
ating Cycle
• Expected Realisation Period -
Case Particulars Oper (in Months)
(In Months)
- 10 . -
(i) Trade Receivables
11
11
12
-
-
(ii) Trade Receivables 15
(iii) Trade Receivables
11 15 -
(iv) Trade Receivables
20 24 -
(v) Trade Receivables
20 -
OF ASSETS (TRADE RECEIVABLES)
STATEMENT SHOWING CLASSIFICATION
SoIu f10n: Reason
Case . As Cu"ent Assets
Or '
Non-current Assets
Expected Realisation Period
(i) Current Assets - is less than the Operating Cycle Period, and
t.
- is within 12 months from the date of Balance Shee
to a period of 12 months (Third
Expected Realisation Peri~ is I~ months whic~ is equal
Current Assets than the Operating Cyde period.
(ii)
Condition) from the date ofBalance Sheet although it is more
Cycle period and also exceeds
Non-current Assets Expected Realisat9n Period is more than the Operating
t.
the period of 12 months from the'date of [Link] Shee
(iii)

Cycle period although it is more

(iv) Current Assets Expected Realisation period is less than the Operating
Sheet.
than the perioq of 12 months from the date of Balance
Cycle period and also exceeds
(v) Non-current Assets Expected Realisation period is more than the Operating
t.
the period of 12 months from the date of Baiance Shee

1. Non -Cu rren t Assets

owing five maj or hea ds:
Non-current Assets are classified into foll
Assets);
(a) Property, Plant and Equ ipm ent (Fixed
(b) Non-current Investments;
(c) Deferred Tax Assets (Net);
(d) Long-term Loans and Advances; and
(e) Other Non-Current Assets.
ets)
(a) Property, Plant and Equipment (Fixed Ass
pan y '
y, Plan t and ~qu ipm ent (Fix ed Ass ets) are those asse ts whi ch are hel d by a com
Propert y
the pur pos e ~f sale but for the pur pos e to increa·se earn ing s of the business. The
not for
d assets are cate gor ised into:
are use d for a long time to earn pro fit Fixe ·
(i) Tangiqle Assets;
(ii) Intangible Assets;
(iii) Capital Work-in-Progress; and
(iv) Intangible Assets un·d er Develop
ment.
d
e physical existence, 1•.e., th ey can b e seen an
(i) Tangible Assets are the assets. .which hav d
touc hed . Examples of [Link] [Link]
. are·· Land, Building, Mach·mer y, Furm•tu re an
. ipment, etc.
Fixtures, Com pute rs, Vehicles, Office Equ
fiflancial Statements of a Company 1.31
ii) Intangible Assets are the assets which do not have physical existence and, thus, cannot
( be seen and touched. Examples of intangible Assets are:
c;oodwill, Brands/frademarks, Computer Software, Mastheads and Publishing Titles, Mining
Rights, Copyrights, Patents, Licences and Franchise, etc.
.. C •tal Work-in-Progress means (fixed) tangible assets under construction.
(ill) ap1 .. . .
·v Intangible Assets under Development means (fixed) mtangible assets like patents, intellectual
(d erty rights etc., under development.
prop '
Non-Current Investments
(b) rrent Investment~ are investments which are held not with the purpose to resell but
Non-~ them. Non-current Investments are further class,ified into "Trade Investments"
to retalll "
d "Other Investments .
an I tments are investments made by a company in shares or debentures of another
Trade nves .
to promote its own trade and busmess.
colllPany ·
Other Investments are those investments which are not trade investments.
ents a:re classified or shown under the following heads:
1nvestm
(i) Investments in P_rQferty;
(ii) Investments in EquitY- lns!ru_ll!e!lts;
(iii) Investments in p e_ference Shar~s;
(iv) Investments in Government or ·Trust Securities;
(v) Investments in Debentures or·Bonds;
(vi) Investments in Mutual Funds;
(vii) Investments in Partne~ship Firms; and
(viii) Other Non-current Investments (Nature to be specified).
(c)Defe"ed Tax Assets (Net) and Deferred Tax Liabilities (Net)
Deferred Tax Liabilities (Net) appears under Non-current Liabilitie.s in the Equity and Liabilities
part of the Balance Sheet and Deferred Tax Assets (Net) appears under Non-current Assets
in the Assets part of the Balance Sheet. The two terms are interrelated as balance in
Deferred Tax Liabilities (Net) in one year may get converted into Deferred Tax Assets
(Net) in the next year and vice versa.
(d) Long-term Loans and Advances
Long-term loans and advances are those .loans and advances that are expected to be received
back in cash or kind, i.e., in the form of an asset after 12 months or after the period of
Operating Cycle from the date of Balance Sheet. These are classified into:
(~ Capital Advances
Advances give f . . fi
ad n or acqum~g xed assets are known as Capital Advances. Normally, such
v_ances are not received back in cash but are received in the form of an asset. It means
capital adv
ances get converted into asset of the company.
1.32 Analysis of Financial State ment s-c
BSE XII

(ii) Security Deposits

d of more than 12 months
Security deposits that are given for a long period, i.e., for a perio
or after the period of Operating Cycle from the date of Balance Sheet of the business are
.. .
asset. Example is se .
classified or show n as long-terni advances, i.e., non- curre nt
. ~~
depo sit for electricity ..
(iii) Other Loans and Advances (Nature to be specified)
n unde r Capital Advances
Long-term loans and advances, other than those classified or show
a_n d Advances. Other loans
and Security Deposits are classified or shown as Othe r Loans
of such loans and advances
and advances are shown according to its nature. Examples
suppliers, etc.
are long-term loans to employees and long-term advances to
(e) Other Non-Current Assets
e classifications (categories)
All other non-curre~t assets that do not fall into any of the abov
classified into:
are classifi'ed or shown as Other Non-current Assets. They are
(i) Long-term Trade Receivables
from the date of Balance
If the amount of trade .receivable is receivable after 12 mont hs
it is classified i.e., shown
Sheet or after the period of Operating Cycle, whichever is later,
as Long-term Trade Receivable.
(ii) Others
ortis ed expenses/losses,
Besides trade receivables there may be other assets such as unam
assets are classified or
insurance claim receivable or amou nt due for asset sold, etc. Such
shown under Other Non-current Assets.
2. Curr ent Asse ts
s:
Current Assets are classified or shown unde r following six head
(a) Current Investments;
(b) Inventories;
(c) Trade Receivables;
(d) Cash and Cash Equivalents; ·
(e) Short-term Loans and Advances; and
(/) Other Current Assets.
Let us discuss .them in detail.
converted into cash
(a)
C~rr~nt Inve 5tments are those investments which are held to be
w1thm a short· period·, i ·e., WI'th'm 12 month s from the date of purch ase of investment.
These are to be classified into:
(i) Investments in Equity Instruments· I

(ii) Investments in Preference Shares;

(iii) Investments in Government or Trust . Secun·t·1es;
(iv) Investments in Debentures or Bonds;
(v) Investments in Mutual Funds; and
(vi) Investments in Partnership Firms, etc.
- 1.33
. anci al Sta tem ents of a Com pan y
f1rt
.
i.) Inventories (stof ck) held for the pur pos e of trade in th e [Link]
course of business,
. - . h
(u ds are cl ass1•f·1ed or
s own as cur ren t
;•e. , for ma nu act urm g or trad. mg of goo • to Cash and Cash
assets because. they are held .wit h the pur pos e to convert th em m
. . k. p ..
uiva lents w1t hm a short pen od. It includes Raw Materials·, Wor -m- rogress; Frmshed
Eq .. es d d
ood s· Sto ck-m -Tra de (for goods pur cha sed for trading)·, Stor an 5pares an Loose
G ,
Tools, etc.
rendered
(c) Trade Receivables means amo unt
s receivable against sale of goods or services
business. They are classified or shown as
by the company in the normal course of
a per iod of 12 months or within the period
current assets if they are receivable wit hin
e Sheet.
of operating cycle from the dat e of Balanc
and BiIIs Receivable.
Trade Receivables includes bot h Debtors
on ma de to mee t the expected loss of
Provision for Doubtful Debts: It is a _provisi
bad debts.
ision for Dou btfu l Deb ts is sho wn und er the relevant hea d separately. It leads to
Prov
two approaches as follows:
Doubtful Debts is sho wn as provision
First Approach: The amo unt of Provision for
rt-term Provision_s dep end ing on whe ther
under either Long-term Provisions or Sho
rm; and
Trade Receivables are Long-term or Short-te
Dou btfu l . Debts is sho wn by way of
Second Approach: The amo unt of Provision for
Trade Receivables.
deduction from the amo unt sho wn und er
h the approaches.
Let us take an example to und erst and bot
it has ma de pro visi on for dou btfu l deb ts
3M Ltd. has Sun dry Debtors oft 5,00,000 and
as follows:
against them oft 50,000. It can be· sho wn
Short-term Provisions:
First Approach: When provision is sho wn as
Notes to Accounts
Particulars - - - - -·
1. Short-term Provisions 50,000
Provision for Doubtful Debts
2. Trade Receivables 5,00,000
-
Sundry Debtors t:.__

of ded ucti on from Trade Receivables:

Second Approach: When provision is sho wn by way
Note to Accounts
Particulars
1. Trade Receivables

____________________________
Sundry Debtors 5,00,000
50,00 0_
:..__ 4,50,000
Less: Provision for Doubtful Debts

(d) Cash and Cash Equivalents

Schedule III · be classified or sho wn as follows:
. reqmres that Cash and Cash Equivalents
(z) Balances with banks;
(ii) Cheques, drafts on hand;
1.34 Arldlysis of financia l State ments- ce
sex,,
(iii) Cas h in Han d;
(iv) Others;
e, Unp aid Dividend);
(v) Ear mar ked balances with banks (for exampl
and
(vi) Balance with banks held as Margin Money;
maturity.
(vii) Bank Deposits with more than 12 mon ths
(e) Short-term Loans and Advances
loans and advances which are expected to b
Short-term Loans and Advances are those · d f · g eye1e from the date of B e
· the perio O ope ratm
· hm
realised with in 12 mon ths or w1t a1ance
Sheet, if operating cycle is more.
(f) Other Current Assets
othe r curr ent assets that do not fall in any of th e above classifications or cate gone. s
All
as Oth er Cur rent Assets. Examples of 0th
und er Current Assets are classified or sho wn
income, dividend receivable, advance taxes, e:
Current Assets are prepaid expenses, accrued
3. Conting ent Lia bili ties and Com mit me nts
se they
(a) Contingent Li'!J?jlit (e53~.Jh_Qse
liabilities wbid!..!!!.ay or ~ay n o ~J :~au
~ For example, a claim is filed against
are deEend! 3t on a ey~ ~.P .Jl~ i n g
r. The cou rt may hold the company at
I the company in a consumer court by a custome
fault and may impose penalty. It may happeri
otherwise also . Whether the company
order. Thus, it is contingent liability.
has a liability or not is dep end ent on court
n as contingent liability because it is
Proposed Dividend for the current year is also show
who may reduce the amount of dividend tQ be paid
subject to approval by the shareholders,
[AS-4 (Revised)].
ks of account but is disclosed in the
Contingent liability is not recorded in the boo
users. It is to be classified into:-
Notes to Accounts for the information of the
(i) Claims against the company not ack
nowledged ·as debts;
(ii) Bills Receivable discounted from Ban
k not yet due for payment;
(iii) Proposed Dividend (Current Year); and
tingently liable.
(iv) Other claims for which the company is con
pany
(b) Commitments mean financial com
mitments due to activities agreed to by the com
be classified into:
to be undertaken by it in future. They are to
(i) Estimated amounts of contracts remaini
ng to be executed on Capital Account and
not provided for;
stments part ly paid; and
(ii) Uncalled liability on shares and other inve
(iii) Other co~ itm ent s (Nature to be spec
ified).

nIustrati on 14 (Classification of Assets).

appearing in the Assets par t of the company's
State the major heads under which the items
III of the Companies Act, 2013.
Balance Sheet are classified as per Schedule
C.,o lutior1 : The major heads on Assets part
are:

(i) Non-current Assets, and

(ii) Current Assets.
 . ancial Statements of a Company 1.35
flll

u·Justration 15 (Classification of 'Non-current Assets').

in the Assets part of th e Ba1ance
aJll
e the sub-heads under the head 'Non-c. urrent Assets'
N
sheet as per Schedule III of the Companies Act, 2013.
solution:
(t) Property, Plant and Equipment (Fixed Assets),
(ii) Non-current Investments,
··;\ Deferred Tax Assets (Net),
(111, .
(iv) Long-term Loans and Advances, and
(v) Other Non-current Assets._
Illustration 16 (Classification of Property, Plant and Equipment (Fixed Assets)).
Name the sub-heads under the head Property, Plant and Equipm ent (Fixed Assets) in the
Assets part of the Balance Sheet as per Schedule ID of the Compa nies Act, 2013.
Solution:
(z) Tangible Assets,
(ii) Intangible Assets,
(iii) Capital Work-in-Progress, and
(iv) Intangible Assets under Develop:p:,.ent.
mustration 17 (Classification of 'Current Asset~').
e
Name the sub-heads under the head 'Curren t Assets' in the Assets part of the Balanc
Sheet as per Schedule III of the Comp ~es Act, i013.
Solution:
(z) Current Investments,
(ii) Inventories,
(iii) Trade Receivables,
(iv) Cash and Cash Equivalents,
(v) Short-term Loans and Advances, and
(vi) Other Current Assets.
Illustration 18 (Tangible Assets).
Name any three items of Tangible Assets.
Solution:
(i) Land and Building,
(ii) Plant and Machinery, and
(iii) Computers.

Ill US tr ation J9 (Intangible Assets).

Name any three items of Intangible Assets.
So!u lion:
(i) Goodwill,
(ii) Brand/frademark and
(iii) Computer Softwa~e.
 me t
1.36 Analysis of Financial State n s-cese x,,

Ill us tra tio n 20 (Non-cu

rrent Investment). ts'.
ud ed un de r th e he ad 'N on -c ur re nt Investmen
in cl
List three ite m s which are
So lu tio n:
ty,
(i) In ve stm en t in Proper
shares, an d
(ii) Investment in Equity
ence Shares.
(iii) Investment in Prefer
Ill us tra tio n 21 (Inventorie
s).
ies.
in clu de d un de r Inventor
List five items th at are
Solution:
(i) Raw Materials,
(ii) Work-in-Progress,
(iii) Firushed Goods,
(iv) Stock-in-Trade, an
d
(v) Loose Tools.
Illustration 22 (Classifica
tion of Assets). · :
ite m s un de r as se ts ac cording to Sc he du le III
Rearrange the following
(i) Office Equipment,
(ii) Loose Tools, -
(iii) Goodwill,
(iv) Trademarks,•
(v) Bills Receivable,,
(vi) Debtors,
(vii) Land,
(viii) Building,
(ix) Stock-in-Trade,
rts,
(x) Stores and Spare Pa
(xi) Furniture,
(xii) Vehicles,
aries ,
(xiii) Advance to Subsidi
(xiv) Cash at Bank,
(xv) Cash in Hand,
(xvi) Work-in-Progress
(Machinery),
(xvii) Plant,
on Inve stments, an d
(xviii) Interest Accrued
tricity Supply Company.
(xix) Deposits with Elec
Solu tio n:
-Tangible
(i) Property, Plant and
Equipment (Fixed Assets)
t.
Furniture, Vehicles, Plan
Building,
Office Equipment, Land, le
y, Plant and Equipment (Fixed Assets)-lntangib
(ii) Prop ert
Goodwill, Trademarks.
firiancial Statements of a Company 1.37
(iii) Capital Work-in-Progress
Work~in-Progress (Machinery).
(iv) Long-term Loans and Advances
Advance to Subsidiaries, Deposits with Electricity Supply Company.
(v) Inventories:
Loose Tools, Stock-in-Trade, Stores and Spare Parts.

(vi) T~ade Receivables

Bills Receivable, Debtors.
(vii) Cash and Cash Equivalents
Cash at Bank, Cash in Hand.
(viii) Other Current Assets
Interest Accrued ori Inve_stments.

Illustration 2~3
. the hea sub-head under which following items are shown in a company's Balance
G1ve -
Sheet as per Schedple III, Part I of the Companies Act, 2013:
(i) Mortgage Loan,
(ii) Patents,
(iii) Investments,
(iv) General Reserve,·
(v) Bills Receivable, and
(vi) 10% Debentures.
Solution: I

s. No. J ltem Main Head Sub-head (if any)

(ij I Mortgage Loan -----+--N_o_n-_cu_rr_en_t---=-Li_ab_il_it_ies_ _ __ _-+-=L_ er-::

o n_g_-t~ rro_w---=-in-=-g_s_ _ _ __
m:-:-B_o_
(ii) Patents Non-current Assets Property, Plant and Equipment
I (Fixed Assets)-lntangible Assets
(im Investments Non-current Assets --t
Non-current Investments _ _ __
(iv) I General Reserve Shareholders' Funds Reserves and Surplus
- 1- - --
(v) Bills Receivable Current Assets Trade Receivables
(vi) I 10% Debentures Non-current Liabilities [ Long-term Borrowings

lllustration 24.
Under what heads and sub-heads the follo~ing items will appear in the Balance Sheet of
a company as per Schedule III, Part I of the Companies Act, 2013?
(i) Tax Reserve· . I

(ii) Interest on Calls-in-Advance;

(iii) Stores and Spares;
(iv) Premium on Redemption of Debentures;
(v) Loose Tools·I
(vi) Balances with Banks. (Delhi 2013, Modified)
1.38 Analysis of Financial Statements-CBSE XII

,olution·
[Link]. Item Main Head Sub-head
- --- - -- --Reserves and
(i)
(ii)
Tax Reserve
Interest on Calls-in-Advance
Shareholders' Funds
- - -
Current Liabilities
-
Surplus
-- Other Current Liabilities -
(iii)
- - - - - Inventories
Stores and Spares Current Assets
-- - - - --- Other Long-term Liabilities
(iv)' Premium on Redemption of N on-current Liabilities
Debentures
(v) Loose Tools Current Assets Inventories

(vi) Current Assets cash and Cash Equivalents

Balances with Banks

Illustration 25.
Under which major heads and sub-heads the following ite.m s will be placed in the
Balance Sheet of a company as per Schedule III, Part I of the Companies Act, 2013?
(1) Accrued Incomes
(ii) Loose Tools
(iii) Provision for Employees Benefits
(iv) Unpaid Dividend
(v) Short-term Loans
(vi) Long-term Loans (Delhi 2014, Modified)
Solution:
[Link]. Item Major Head Sub-head
(i) Accrued Incomes Current Assets Other Current Assets
(ii) Loose Tools Current Assets Inventories
(iii) Provision for Employees Benefits Non-Current Liabilities Long-term Provisions
(iv) Unpaid Dividend Current Liabilities Other Current Liabilities
(v) Short-term Loans Current Liabilities Short-term Borrowings
- ---
(vi) Long-term Loans Non-Current Liabilities Long-term Borrowings

Illustration 26.
Under which sub-heads will the following items be placed in the Balance Sheet of a
company as per Schedule III, Part I of the Companies Act, 2013?
(i) Capital Reserve
(ii) Bonds
(iii) Loans repayable on Demand
(iv) Vehicles
(v) Goodwill
(vi) Loose Tools (OD 201 4, Modified)
 fina ncial Sta tem ent s of a Com pan y
__
1.39
soJu t:.;..io_1_1:_ _ _ _ _ _ _ _ _ _
--- -
~ Item Sub-head - - - - - - - - -
::,~ji Capita/ Reserve Reserves and Surplus
(Ii) aoods ' Long -term Borrowings
...)- Loans repayable on Demand Short-term Borrowings
(If/ -
Property, Plant and Equipment (Fi ><eel Assets) t lbl ·
(M . J
Vehicles -
Property, Plant and Equipment (Fixed A set -
ang eAssets
·10 LGoo~wi!l
--

Inventories s s)- lntanglble Assets

( 0! /Coose Tools
mustration 27. ..
of Assets par t are the followin items classified
der what ma in hea ds and sub -he ads g
pan y as per Schedule III?
Un h wn in the Balance She et of a com
ors 0 ·
(i) Bills Receivable,
(ii) Sundry Debtors,
(iii) Long-term Investments, .
(iv) Shares in Listed Com pam es,
(v) Prepaid Irtsurance, ..
(vi) Deposit wit h Cus tom s Au tho ntie
s,

(vii) Stores and Spares,

(viii) Current Investments,
(ix) Livestock, and
(x) Matured Debentures.
Solution:
Main Head Sub-head
I
[Link]. Item
Current Assets Trade Receivables -
(i) I Bills Receivable Trade Receivables
Curren·t Assets
(ii) Sundry Debtors
Non-current Assets Non-current Investments
(iii) ' Long-term Investments -
Non-current Assets Non-current Investments
(iv) Shares in Listed Companies -- -
'
Current Assets Other Current Assets
(v) Prepaid Insurance - - --
(vi) 1Deposit with Customs Authorities Non-current Assets
.
_J_ Long-ten~ Loans and Advances:_ _
- -
LCurrent Assets / Inventories
(vii) Stores and Spares
- -----
(viii) I Current Investments - - [ Current Assets [ Current ,; estments _ - -

- (ix) Livestock - Non-current Assets

1
Property, Plant and Equipment
i' (Fixed Assets)-Tangib/e Assets
Current Liabilities Other Current Liabilities
Wf ;;tured Debentures
.e· ·
*C onsid
ring It to be deposited for long-term.
fllustration 28.
. et
Under Which ma. h [Link] the foll ow
JOr ea ing item s will be pre sen ted in the Balance She
of a comp pan ies Ac t 2013?
(i) Loanany as per Schedule III, Par t I of the om '
s provi·cted repayable on dem an J
(11'')
Goodwill fJ

(iii) Copyrights
1.40 Analysis of Financial Statements-CB SE XII

(iv) Loose Tools

(v) Chequ~s
(vi) General Reserve
(vii) Stock of Finished Goods
(viii) 9% Debentures repayable after three years (Delhi 2015)
Solution:
S. No. Item . . _Ma_Jo_r He_ad __ __ __ __ __ _
- (i) ~~s provided Repayable on_pemand ___ ___,. Current Assets
(iij Goodwill _ _ Non-current Assets
(i;n Copyrights Non-current Assets
------·----
(iv) Loose Tools Current Assets
-- r
(v) Cheques Current Assets
(vi) General Reserve Shareholders' Funds
--- -
(vii) I Stock of Finished Goods Current Assets
(viii) j 9% Debentures Repayable After Three Years
Non-current Liabilities

Illust ration 29.

Under which major headings and sub-headings will the follow
ing items be shown in the
Balance Sheet of a company as per Sche~ule III, Part I of the
Companies Act, 2013?
(i) Net Loss as show n by Statement of Profit and Loss
(ii) Capital Redemption Reserve
(iii) Bonds
(iv) Loans repayable on dema nd
(v) Unpaid divid end
(vi) Buildings
(vii) Trademarks
(viii) Raw materials
(OD 2015, Modified)
Solut ion:
[Link]. Item \ Major Head Sub-head
(i) N;;:;,., as s~own by Statement . Sha;eholders' F~nds
Reserves and Surplus (As negative
of Profit and Loss
amount)
(ii) ' Capital Redemption Reserve Shareholders' Funds Reserves and Surplus
(iii) Bonds Non-current Liabilities
1 Long-term Borrowings
(iv) Loans repayable on demand Current Liabilities Short-term Borrowings
(v) Unpaid Dividend \ Current Liabilities Other Current Liabilities
(vi) Buildings Non-current Assets Property, Plant and Equipment
(Fixed Assets)-Tangible Assets
(vii) Trademarks Non-current Assets Property, Plant and Equipment
(Fixed Assets)-lntangible Assets
Raw materials Current Assets
(viii) Inventories
-