From the following Balance Sheet of Nayak Ltd. prepare a Comparative Balance Sheet : Balance Sheet of Nayak Ltd. as at 31st March, 2024 | Particulars | 31.3.2024 (₹) | 31.3.2023 (₹) | | --- | --- | --- | | I – Equity and Liabilities : 1. Shareholders’ Funds Share Capital | 6,00,000 | 4,00,000 | | 2. Non-Current Liabilities Long-term borrowings | 2,25,000 | 1,50,000 | | 3. Current Liabilities Trade Payables | 75,000 | 50,000 | | Total | 9,00,000 | 6,00,000 | | II – Assets : 1. Non-Current Assets Property, Plant and Equipment and Intangible Assets | 6,75,000 | 4,50,000 | | 2. Current Assets (a) Inventories | 1,50,000 | 1,00,000 | | (b) Cash and Cash Equivalents | 75,000 | 50,000 | | Total | 9,00,000 | 6,00,000 |

> [!TLDR] > Comparative Balance Sheet shows absolute changes and percentage changes for each item: Share Capital increased by ₹2,00,000 (50%), Long-term borrowings by ₹75,000 (50%), Trade Payables by ₹25,000 (50%), Property, Plant and Equipment by ₹2,25,000 (50%), Inventories by ₹50,000 (50%), and Cash by ₹25,000 (50%). ## Concept and Treatment A **Comparative Balance Sheet** is an analytical tool that presents the Balance Sheet figures of two or more periods side by side, along with the absolute change (increase or decrease in rupees) and the percentage change for each item. This horizontal analysis helps stakeholders identify trends, assess growth, and evaluate the financial position over time. The treatment involves: 1. **Absolute Change**: Calculated as Current Year figure minus Previous Year figure. A positive result indicates an increase; a negative result indicates a decrease. 2. **Percentage Change**: Calculated as $\frac{\text{Absolute Change}}{\text{Previous Year Figure}} \times 100$. This shows the rate of change relative to the base year. 3. **Presentation**: The statement retains the standard Balance Sheet format (Schedule III of the Companies Act, 2013) but adds two additional columns — one for absolute change and one for percentage change. The purpose is to facilitate inter-period comparison. Management, investors, and creditors use this to understand whether assets are growing proportionately with liabilities, whether the capital structure is changing, and whether working capital components are moving in the desired direction. --- ## Solution **Comparative Balance Sheet of Nayak Ltd.** **as at 31st March, 2024 and 31st March, 2023** | **Particulars** | **31.3.2024 (₹)** | **31.3.2023 (₹)** | **Absolute Change (₹)** | **Percentage Change (%)** | |---|---:|---:|---:|---:| | **I – Equity and Liabilities:** | | | | | | **1. Shareholders' Funds** | | | | | | Share Capital | 6,00,000 | 4,00,000 | +2,00,000 | +50.00 | | **2. Non-Current Liabili

From the following Balance Sheet of Nayak Ltd. prepare a Comparative Balance Sheet : Balance Sheet of Nayak Lt

Question

From the following Balance Sheet of Nayak Ltd. prepare a Comparative Balance Sheet :

Balance Sheet of Nayak Ltd. as at 31st March, 2024

Particulars	31.3.2024 (₹)	31.3.2023 (₹)
I – Equity and Liabilities : 1. Shareholders’ Funds Share Capital	6,00,000	4,00,000
2. Non-Current Liabilities Long-term borrowings	2,25,000	1,50,000
3. Current Liabilities Trade Payables	75,000	50,000
Total	9,00,000	6,00,000
II – Assets : 1. Non-Current Assets Property, Plant and Equipment and Intangible Assets	6,75,000	4,50,000
2. Current Assets (a) Inventories	1,50,000	1,00,000
(b) Cash and Cash Equivalents	75,000	50,000
Total	9,00,000	6,00,000

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Concept understanding — Balance Sheet Presentation

Balance Sheet Presentation – A First Look

Think of your own finances. You have some things you own – a phone, a bike, maybe some cash in your pocket. And you have some things you owe – maybe you borrowed money from a friend, or you have a pending fee payment. If you wrote down everything you own on one side and everything you owe (plus what's truly yours) on the other, you'd have a personal balance sheet.

That's exactly what a company does. The Balance Sheet is a snapshot of a business's financial position at a single point in time – usually the last day of the accounting year. It shows two sides that must always be equal:

Assets = Liabilities + Capital

This is the fundamental accounting equation. The Balance Sheet is not an account – it's a statement. It doesn't get debited or credited. It simply presents the balances of real accounts (assets) and personal accounts (liabilities) plus the capital account, after all transactions for the year have been recorded and the Profit & Loss Account has been closed.

Why Does It Matter?

The Balance Sheet answers three critical questions for anyone reading it – owners, banks, investors, tax authorities:

What does the business own? (Assets – from cash to machinery to buildings)
What does the business owe to outsiders? (Liabilities – loans, creditors, outstanding expenses)
What is the owner's stake? (Capital – the net worth)

If the Balance Sheet doesn't balance, something is wrong in the books. That's why it's the final check after preparing the Trial Balance and the Profit & Loss Account.

The Format (as per NCERT Class 12)

The Companies Act, 2013 prescribes a specific format for the Balance Sheet. It is divided into two sides:

Left Side (Liabilities + Capital)	Right Side (Assets)
1. Shareholders' Funds	1. Non-Current Assets

Share Capital | - Fixed Assets (Tangible & Intangible)
Reserves & Surplus | - Non-Current Investments
Money received against share warrants | - Long-term Loans & Advances 2. Share Application Money pending allotment | 2. Current Assets 3. Non-Current Liabilities | - Current Investments
Long-term Borrowings | - Inventories
Deferred Tax Liabilities (Net) | - Trade Receivables
Other Long-term Liabilities | - Cash & Cash Equivalents
Long-term Provisions | - Short-term Loans & Advances 4. Current Liabilities | - Other Current Assets
Short-term Borrowings |
Trade Payables |
Other Current Liabilities |
Short-term Provisions |

Note

This is the vertical format (also called the "order of liquidity" format) used by companies. For sole proprietors and partnerships, a simpler horizontal format is common, but the principle is identical.

Accounting Treatment – What Gets Debited/Credited?

The Balance Sheet itself is never debited or credited. It is a statement of balances. However, the items that appear on it come from accounts that were debited or credited during the year.

Here's how the major items originate:

Balance Sheet Item	Originates From	Debit/Credit Nature
Capital	Capital Account	Credit balance (owner's claim)
Reserves & Surplus	Profit & Loss Appropriation Account	Credit balance (undistributed profit)
Long-term Borrowings	Loan Account (e.g., Bank Loan)	Credit balance (liability)
Trade Payables	Creditors Account	Credit balance (amount owed)
Fixed Assets	Asset Account (e.g., Machinery A/c)	Debit balance (what the business owns)
Inventories	Stock Account	Debit balance (goods on hand)
Trade Receivables	Debtors Account	Debit balance (amounts due from customers)
Cash & Bank	Cash/Bank Account	Debit balance (positive cash)

Watch out

A common mistake: students think the Balance Sheet is "balanced" by making a journal entry. No – it balances because the accounting equation always holds. Every debit has a matching credit somewhere.

--- …

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A Comparative Balance Sheet adds three columns to the standard vertical format: the absolute change in each item, the percentage change, and sometimes remarks on the direction of movement. The absolute change is calculated as (Current Year − Previous Year), and the percentage change as $\frac{\text{Absolute Change}}{\text{Previous Year}} \times 100$ .

Comparative Balance Sheet of Nayak Ltd.

as at 31st March, 2024

Particulars	31.3.2024 (₹)	31.3.2023 (₹)	Absolute Change (₹)	Percentage Change (%)
I – Equity and Liabilities:
1. Shareholders' Funds
Share Capital	6,00,000	4,00,000	2,00,000	50
2. Non-Current Liabilities
Long-term borrowings	2,25,000	1,50,000	75,000	50
3. Current Liabilities
Trade Payables	75,000	50,000	25,000	50
Total	9,00,000	6,00,000	3,00,000	50

II – Assets:
1. Non-Current Assets
Property, Plant and Equipment and Intangible Assets	6,75,000	4,50,000	2,25,000	50
2. Current Assets
(a) Inventories	1,50,000	1,00,000	50,000	50
(b) Cash and Cash Equivalents	75,000	50,000	25,000	50

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Comparative Balance Sheet shows absolute changes and percentage changes for each item: Share Capital increased by ₹2,00,000 (50%), Long-term borrowings by ₹75,000 (50%), Trade Payables by ₹25,000 (50%), Property, Plant and Equipment by ₹2,25,000 (50%), Inventories by ₹50,000 (50%), and Cash by ₹25,000 (50%).

Concept and Treatment

A Comparative Balance Sheet is an analytical tool that presents the Balance Sheet figures of two or more periods side by side, along with the absolute change (increase or decrease in rupees) and the percentage change for each item. This horizontal analysis helps stakeholders identify trends, assess growth, and evaluate the financial position over time.

The treatment involves:

Absolute Change: Calculated as Current Year figure minus Previous Year figure. A positive result indicates an increase; a negative result indicates a decrease.
Percentage Change: Calculated as $\frac{\text{Absolute Change}}{\text{Previous Year Figure}} \times 100$ . This shows the rate of change relative to the base year.
Presentation: The statement retains the standard Balance Sheet format (Schedule III of the Companies Act, 2013) but adds two additional columns — one for absolute change and one for percentage change.

The purpose is to facilitate inter-period comparison. Management, investors, and creditors use this to understand whether assets are growing proportionately with liabilities, whether the capital structure is changing, and whether working capital components are moving in the desired direction.

Solution

Comparative Balance Sheet of Nayak Ltd.

as at 31st March, 2024 and 31st March, 2023

Particulars	31.3.2024 (₹)	31.3.2023 (₹)	Absolute Change (₹)	Percentage Change (%)
I – Equity and Liabilities:
1. Shareholders' Funds
Share Capital	6,00,000	4,00,000	+2,00,000	+50.00
2. Non-Current Liabilities
Long-term borrowings	2,25,000	1,50,000	+75,000	+50.00
3. Current Liabilities
Trade Payables	75,000	50,000	+25,000	+50.00
Total	9,00,000	6,00,000	+3,00,000	+50.00

II – Assets:
1. Non-Current Assets
Property, Plant and Equipment and Intangible Assets	6,75,000	4,50,000	+2,25,000	+50.00
2. Current Assets
(a) Inventories	1,50,000	1,00,000	+50,000	+50.00
(b) Cash and Cash Equivalents	75,000	50,000	+25,000	+50.00
Total	9,00,000	6,00,000	+3,00,000	+50.00

Working Notes

W.N. 1: Calculation of Absolute Changes

Item	31.3.2024 (₹)	31.3.2023 (₹)	Absolute Change (₹)
Share Capital	6,00,000	4,00,000	6,00,000 − 4,00,000 = +2,00,000
Long-term borrowings	2,25,000	1,50,000	2,25,000 − 1,50,000 = +75,000
Trade Payables	75,000	50,000	75,000 − 50,000 = +25,000
Property, Plant and Equipment	6,75,000	4,50,000	6,75,000 − 4,50,000 = +2,25,000
Inventories	1,50,000	1,00,000	1,50,000 − 1,00,000 = +50,000
Cash and Cash Equivalents	75,000	50,000	75,000 − 50,000 = +25,000
Total	9,00,000	6,00,000	9,00,000 − 6,00,000 = +3,00,000

W.N. 2: Calculation of Percentage Changes

Item	Absolute Change (₹)	Previous Year (₹)	Percentage Change (%)
Share Capital	+2,00,000	4,00,000	$\frac{2,00,000}{4,00,000} \times 100$ = +50.00
Long-term borrowings	+75,000	1,50,000	$\frac{75,000}{1,50,000} \times 100$ = +50.00
Trade Payables	+25,000	50,000	$\frac{25,000}{50,000} \times 100$ = +50.00

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

Showing the 12 most recent of 63 on this concept.

CBSE 2026Set MARCH1 mark
$Q. Loans which are repayable within __________ months, are called as short-term borrowings.$
›Reveal solutionSolution

Loans repayable within 12 months are called short-term borrowings.

As per Schedule III of the Companies Act, 2013, a liability is classified as current if it is expected to be settled within twelve months from the reporting date. Borrowings meeting this condition are shown under Current Liabilities as short-term borrowings; borrowings repayable after twelve months are long-term (non-current) borrow …

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CBSE 2026Set ANNUAL1 markMCQ
$Q. According to Indian Companies Act, 2013, the term "Sundry-creditor" has been replaced by which term? A) Trade receivables B) Trade payables C) Trade debtors D) Bills payables$
›Reveal solutionSolution
'Sundry Creditors' is now shown as 'Trade Payables' under the Companies Act, 2013 - option (B).

The revised Schedule III format modernised the balance-sheet terminology that RBSE / CBSE Class-12 Accountancy follows:

Sundry Creditors -> Trade Payables (option B). …
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CBSE 2026Set ANNUAL1 mark
$Q. Fill in the blank: Those Assets, which are realised within __________ months are called current assets. (12/24)$
›Reveal solutionSolution

Assets realised within 12 months are classified as current assets.

As per Schedule III of the Companies Act, 2013, an asset is treated as current if it is expected to be realised within twelve months after the reporting date (or within the firm's normal operating cycle, or is held primarily for trading, or is cash/cash equivalent). Ass …

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CBSE 2026Set ANNUAL1 markMCQ
$Q. Current liabilities include$
(a) Sundry creditors
(b) Outstanding expenses
(c) Bills payable
(d) All of these
›Reveal solutionSolution

All the listed items are current liabilities - option (d).

Current liabilities are obligations payable within a short period (normally one year). Sundry creditors (trade payables), outstanding expenses (expenses incurred but not yet paid) and bills payable (short-term promis …

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CBSE 2026Set ANNUAL1 markMCQ
$Q. The Balance Sheet of a company is prepared according to which schedule of the Indian Companies Act 2013?$
(a) Schedule I
(b) Schedule II
(c) Schedule III
(d) Schedule V
›Reveal solutionSolution

Correct option: (c) Schedule III.

Section 129 of the Companies Act, 2013 requires every company to prepare its Balance Sheet in the vertical form prescribed in Schedule III of the Act. So th …

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CBSE 2026Set ANNUAL1 markMCQ
$Q. Office Building under construction which may take 3 to 4 years for completion will be shown under _______ in the Balance Sheet of the Company.$
(a) Intangible assets under development
(b) Capital work in Progress
(c) Non-Current Assets
(d) Work in Progress
(a) Intangible assets under development
(b) Capital work in Progress
(c) Non-Current Assets
(d) Work in Progress
›Reveal solutionSolution

Office Building under construction is shown under Capital Work in Progress (Option B).

'Capital Work in Progress' (CWIP) represents the cost incurred so far on fixed assets that are being constructed or installed but are not yet ready for their intended use. Since the office building here will take 3 to 4 more years to complete, it is not yet a usable (operational) fixed asset; it cannot be depreciated or classified as a completed Building. It is disclosed as a separate line under Non-current Assets → Fixed Assets → Capital Work in Progress, …

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CBSE 2026Set ANNUAL1 markMCQ
$Q. Under which Sub-head will "Patents and Trademark" appear in the Balance Sheet of a Company as per Schedule III of Company's Act, 2013 ?$
(a) Intangible Assets
(b) Tangible Assets
(c) Other Current Assets
(d) Other Non-current Assets
›Reveal solutionSolution

Patents and Trademarks are shown under the sub-head "Intangible Assets" (within Fixed Assets, under Non-Current Assets).

As per the Schedule III format of the Balance Sheet (Companies Act, 2013), the asset side is classified as follows:

II. Assets

1. Non-current Assets

  (a) Fixed Assets

    (i) Tangible Assets — Land, Building, Plant & Machinery, Furniture & Fixtures, Vehicles (assets with physical existence)

    (ii) Intangible Assets — Goodwill, Patents, Trademarks, Copyrights, Computer Software (assets with NO physical existence but having a long-term, identifiable value to the business)

    (iii) Capital Work-in-Progress

    (iv) Intangible Assets under Development

…

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CBSE 2025Set 67/6/11 markMCQ
$Q. There are two statements : Statement I : The balance in the Statement of Profit and Loss in the Balance Sheet of Samta Ltd. showed a deficit of ₹ 2,00,000 on 31.03.2023 and a surplus of ₹ 3,00,000 on 31.3.2024. ₹ 5,00,000 will be considered as profit earned during the year for preparing Cash Flow Statement. Statement II : On 31.03.2023 the goodwill account of Zeeta Ltd. showed a balance of ₹ 4,00,000 and on 31.03.2024 it showed a balance of ₹ 5,00,000. ₹ 1,00,000 will be considered as goodwill acquired during the year for the preparation of Cash Flow Statement. Choose the correct option from the following : (A) Both the Statements are true. (B) Both the Statements are false. (C) Statement I is true, Statement II is false. (D) Statement II is true, Statement I is false.$
›Reveal solutionSolution
Both Statement I, which calculates the profit earned during the year for Cash Flow Statement purposes, and Statement II, which identifies goodwill acquired during the year, are correct based on standard accounting principles.

Let's break down each statement to understand the underlying accounting concepts and their treatment in the preparation of a Cash Flow Statement.

Concept and Treatment

Statement I: Profit and Loss Balance for Cash Flow Statement

The Statement of Profit and Loss (P&L) balance shown in the Balance Sheet represents the accumulated profits or losses of the company up to that date. When preparing a Cash Flow Statement (CFS) using the indirect method, we need to determine the profit earned during the current year to arrive at the Net Profit Before Tax and Extraordinary Items. This figure is crucial because it forms the starting point for adjusting non-cash items and non-operating items to calculate cash flow from operating activities.

If the P&L balance shifts from a deficit (an accumulated loss, which is a debit balance) to a surplus (an accumulated profit, which is a credit balance), the profit generated during the year must have been sufficient to first cover the entire opening deficit and then create the closing surplus. The sum of these two amounts represents the total profit available for appropriation during the year.

Statement II: Goodwill Account for Cash Flow Statement

Goodwill is an intangible asset. An increase in the balance of any asset account, including goodwill, generally indicates that the asset has been acquired during the accounting period. In the context of a Cash Flow Statement, the acquisition of an asset (whether tangible like machinery or intangible like goodwill) is classified as a cash outflow under Investing Activities. This is because cash is used to purchase long-term assets that are expected to generate future economic benefits for the business. Conversely, a decrease in goodwill could be due to its amortisation (a non-cash expense) or its sale (a cash inflow).

Working Notes

Working Note 1: Calculation of Profit Earned During the Year (Statement I)

Opening Balance of Statement of Profit and Loss (as on 31.03.2023) = Deficit of ₹ 2,00,000 (This is a debit balance).

Closing Balance of Statement of Profit and Loss (as on 31.03.2024) = Surplus of ₹ 3,00,000 (This is a credit balance).

To calculate the profit earned during the year, we need to determine the total change from the opening deficit to the closing surplus.

Amount of profit required to cover the opening deficit = ₹ 2,00,000

Amount of profit required to create the closing surplus = ₹ 3,00,000

Total Profit Earned During the Year = ₹ 2,00,000 (to cover deficit) + ₹ 3,00,000 (to create surplus) = ₹ 5,00,000. …
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CBSE 2025Set MARCH1 mark
$Q. Under which head goodwill is shown in the balance-sheet?$
›Reveal solutionSolution
Goodwill appears under Non-current Assets, sub-head Fixed Assets — Intangible Assets, in a company's balance sheet (Schedule III).

In GSEB Class-12 Commerce Accountancy (Financial Statements of a Company):

Under the equity-and-liabilities/assets format, goodwill is an intangible asset.

It is disclosed under Non-current Assets → Property, Plant & Equipment and Intangible Assets → Intangible Assets. …
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CBSE 2025Set MARCH1 mark
$Q. Give an example for non-current liabilities.$
›Reveal solutionSolution

Example of a non-current liability: long-term borrowings such as debentures or a long-term loan.

Under Schedule III of the Companies Act, 2013, non-current liabilities are those that do not fall due for payment within twelve months (or the operating cycle). They include long-term borrowings (debentures, bonds, long-term loans from banks/financial institutions), long-ter …

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CBSE 2025Set ANNUAL1 markMCQ
$Q. Provision for Tax is (A) Current liabilities (B) Internal reserve (C) Both (A) and (B) (D) None of these$
›Reveal solutionSolution
Provision for tax is created by charging profit to meet a known future tax obligation; it is shown as a current liability and also represents an internal reserve (a provision out of profits). Hence the answer is (C) Both (A) and (B).

For Bihar Class-12 (BSEB Inter) commerce candidates:

As a current liability: tax on the year's profit is expected to be paid within the near future, so provision for tax is shown among current liabilities (short-term provisions) in the company's Balance Sheet. …
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CBSE 2025Set ANNUAL1 markMCQ
$Q. Patents and copyrights fall under which category ? (A) Current Assets (B) Liquid Assets (C) Intangible Assets (D) All of these$
›Reveal solutionSolution
Patents and copyrights are long-term rights owned by the business that have value but no physical form, which makes them intangible assets. Hence the answer is (C) Intangible Assets.

For the BSEB Inter / Bihar Class-12 Accountancy syllabus, assets are classified by their nature:

Tangible assets: have physical existence (land, building, plant, machinery).

Intangible assets: have no physical existence but give long-term benefits and are owned by the business — goodwill, patents, copyrights, trademarks, computer software. …
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Concept and Treatment

Solution

Working Notes

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