Prepare a balance sheet of Black Swan Ltd. as at March 31, 2017 from the following information: | Particulars | Amount (₹) | |---|---| | General Reserve | 3,000 | | 10% Debentures | 3,000 | | Balance in Statement of Profit and Loss | 1,200 | | Depreciation on fixed assets | 700 | | Gross Block | 9,000 | | Current Liabilities | 2,500 | | Preliminary Expenses | 300 | | 6% Preference Share Capital | 5,000 | | Cash & Cash Equivalents | 6,100 |

> [!TLDR] > Classified under Schedule III, the Balance Sheet of Black Swan Ltd. balances at ₹14,700: Shareholders' Funds ₹9,200 (6% Preference Capital ₹5,000 + Reserves & Surplus ₹4,200), 10% Debentures ₹3,000 and Current Liabilities ₹2,500, against Net Fixed Assets ₹8,300, Cash ₹6,100 and Preliminary Expenses ₹300. **Balance Sheet of Black Swan Ltd. as at 31 March 2017** | Particulars | Note | Amount (₹) | |---|---|---| | **I. EQUITY AND LIABILITIES** | | | | 1. Shareholders' Funds | | | | (a) Share Capital | 1 | 5,000 | | (b) Reserves & Surplus | 2 | 4,200 | | 2. Non-current Liabilities | | | | (a) Long-term Borrowings | 3 | 3,000 | | 3. Current Liabilities | 4 | 2,500 | | **Total** | | **14,700** | | **II. ASSETS** | | | | 1. Non-current Assets | | | | (a) Property, Plant & Equipment (Net) | 5 | 8,300 | | (b) Other Non-current Assets (Preliminary Expenses) | 6 | 300 | | 2. Current Assets | | | | (a) Cash & Cash Equivalents | | 6,100 | | **Total** | | **14,700** | **Notes to Accounts** 1. **Share Capital:** 6% Preference Share Capital = ₹5,000 (no equity share capital is given). 2. **Reserves & Surplus:** General Reserve ₹3,000 + Balance in Statement of Profit & Loss ₹1,200 = ₹4,200. 3. **Long-term Borrowings:** 10% Debentures = ₹3,000. …

Prepare a balance sheet of Black Swan Ltd. as at M – Class 12 Accountancy

Numerical Questions · Q7

Prepare a balance sheet of Black Swan Ltd. as at March 31, 2017 from the following information:

Particulars	Amount (₹)
General Reserve	3,000
10% Debentures	3,000
Balance in Statement of Profit and Loss	1,200
Depreciation on fixed assets	700
Gross Block	9,000
Current Liabilities	2,500
Preliminary Expenses	300
6% Preference Share Capital	5,000
Cash & Cash Equivalents	6,100

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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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We need to prepare a Balance Sheet from the given items. First, classify each item correctly.

Assets:

Gross Block (Fixed Assets at cost): ₹9,000
Less: Depreciation on fixed assets: (₹700) → Net Fixed Assets = ₹8,300
Preliminary Expenses (a fictitious asset under the old format, or a deferred expense): ₹300
Cash & Cash Equivalents (Current Assets): ₹6,100

Liabilities & Equity:

6% Preference Share Capital: ₹5,000
General Reserve: ₹3,000
Balance in Statement of Profit and Loss (Surplus, i.e., retained earnings): ₹1,200
10% Debentures (Long-term borrowings): ₹3,000
Current Liabilities: ₹2,500

Check the Accounting Equation:

Total Assets = Net Fixed Assets (8,300) + Preliminary Expenses (300) + Cash (6,100) = ₹14,700

Total Liabilities & Equity = Preference Capital (5,000) + General Reserve (3,000) + P&L Surplus (1,200) + Debentures (3,000) + Current Liabilities (2,500) = ₹14,700

The equation balances. We present the Balance Sheet in the vertical format as per the Companies Act, 2013 (old schedule VI format is acceptable for this data, but vertical is standard).

Balance Sheet of Black Swan Ltd. as at March 31, 2017

Particulars	Note No.	Amount (₹)
I. EQUITY AND LIABILITIES
(1) Shareholders' Funds
(a) Share Capital	1	5,000
(b) Reserves and Surplus	2	4,200
(2) Non-Current Liabilities
(a) Long-term Borrowings	3	3,000
(3) Current Liabilities
(a) Trade Payables / Other Current Liabilities		2,500
Total		14,700
II. ASSETS
(1) Non-Current Assets
(a) Fixed Assets

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Classified under Schedule III, the Balance Sheet of Black Swan Ltd. balances at ₹14,700: Shareholders' Funds ₹9,200 (6% Preference Capital ₹5,000 + Reserves & Surplus ₹4,200), 10% Debentures ₹3,000 and Current Liabilities ₹2,500, against Net Fixed Assets ₹8,300, Cash ₹6,100 and Preliminary Expenses ₹300.

Balance Sheet of Black Swan Ltd. as at 31 March 2017

Particulars	Note	Amount (₹)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital	1	5,000
(b) Reserves & Surplus	2	4,200
2. Non-current Liabilities
(a) Long-term Borrowings	3	3,000
3. Current Liabilities	4	2,500
Total		14,700
II. ASSETS
1. Non-current Assets
(a) Property, Plant & Equipment (Net)	5	8,300
(b) Other Non-current Assets (Preliminary Expenses)	6	300
2. Current Assets
(a) Cash & Cash Equivalents		6,100
Total		14,700

Notes to Accounts

Share Capital: 6% Preference Share Capital = ₹5,000 (no equity share capital is given).
Reserves & Surplus: General Reserve ₹3,000 + Balance in Statement of Profit & Loss ₹1,200 = ₹4,200.
Long-term Borrowings: 10% Debentures = ₹3,000. …

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