Financial Statements of a Company

Forms and Content of Balance Sheets and Peculiar Items

Balance sheets are one of the most important financial statements of a business. They disclose details relating generally to assets and liabilities. They even show the exact nature of these assets and debts. Let us take a look at the contents of balance sheets and some peculiar items they contain.

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The Form of a Balance Sheet

A balance sheet contains two parts. One side shows assets, while the other contains details of liabilities. Every balance sheet of a company has to be prepared in consonance with (Revised) Schedule VI of Companies Act, 1956.

Schedule VI also contains many other disclosure requirements. Balance sheets and statements of profits and losses must reflect them as well. The format of these should be the same as the Schedule provides.

Peculiar items

Contents of a Balance Sheet and Peculiar Items

Along with several peculiar items, a balance sheet must contain the following items.

1. Shareholders’ Fund

According to Schedule VI, a balance sheet must sub-classify shareholders’ fund as follows:

  1. Share capital
  2. Reserves and surplus
  3. Money receivable against share warrants

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2. Share Capital

The notes to accounts in a balance sheet must state details pertaining to share capital. They must also include the following peculiar items and modifications:

  • Disclosures for each class of shares must state the number of shares outstanding.
  • They must also disclose restrictions on distribution of dividends and payment of capital.
  • Further, to clarify the identities of promoters of the company the notes to accounts must show details pertaining to certain classes of shareholders.
  • Details of authorized shares, paid-up capital, par value of shares, the aggregate value of shares allotted to each class of shareholders, etc. must be stated separately.
  • Accountants also have to disclose the number of forfeited shares, terms & conditions of convertible securities, number of shares bought-back, etc.

3. Reserve and Surplus

Every balance sheet has to classify all reserves and surplus funds of a company in the following categories:

  1. Capital Reserve
  2. Capital Redemption Reserve
  3. Debenture Redemption Reserve
  4. Securities Premium Reserve
  5. Share Options Outstanding Account
  6. Revaluation Reserve
  7. Surplus funds like the balance of profit and loss statement, dividend, bonus shares, etc.

4. Money Received Against Share Warrants

The balance sheet must disclose all money receivable from share warrants as a separate line under Shareholders’ Funds.

5. Classification of Current and Non-Current Items

All assets, liabilities and other peculiar items have to be categorized as either current or non-current. This classification is necessary because it helps in understanding these items comprehensively.

Current items are basically those that have a shorter value of utilization period. Thus, they are realizable within 12 months, they are tradeable, they are cash or cash-equivalent, etc. On the contrary, all other assets and liabilities are non-current. Hence, they are realizable beyond the period of 12 months.

6. Liabilities

Balance sheets show liabilities along with details of share capital and equity. As we read above, liabilities can be current or non-current.

Current liabilities are basically those which are repayable within 12 months. For example, trade payables are current liabilities. Concurrently, those that are payable after a year are non-current or long-term liabilities. Thus, bank loans are generally non-current debts.

7. Fixed Assets

Balance sheets always depict all assets below details of equity and liability. First, fixed assets are described, and then current assets. Fixed assets are nothing but non-current assets. Thus, their useful life extends beyond 12 months. Fixed assets include both tangible as well as intangible assets. Apart from these assets, all other assets are current assets.

8. Investments

Even investments of a company are assets. Furthermore, they can also be current or non-current. Investments realizable within 12 months are current investments, while all others are non-current.

9. Cash and Cash Equivalent

All cash funds and cash-equivalent items of a company are treated as current assets. Balance sheets always have to show them separately. All these rules generally have to be followed strictly in balance sheets. Apart from these, accountants also have to show other peculiar items like trade payables, trade receivables, inventories, provisions, etc.

Solved Examples for You

Question: Fill in the blanks in these following statements.

  1. Balance Sheets have to conform to the format of _____.
  2. Current items are basically categorized with the time period of less than _____.
  3. Capital Redemption Reserve comes under the head of _____.


  1. Schedule VI of Companies Act, 1956
  2. 12 months
  3. Reserves and Surplus
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