Q.Dinkar Ltd. has an authorised capital of ₹50,00,000 divided into equity shares of ₹100 each. The company invited applications for 40,000 shares, applications for 36,000 shares were received. All calls were made and duly received except for 500 shares on which the final call of ₹20 was not received. The company forfeited 200 shares on which final call was not received. Show how share capital will appear in the balance sheet of the company. Also prepare 'Notes to Accounts' for the same.

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:

1. What does the business own? (Assets – from cash to machinery to buildings)
2. What does the business owe to outsiders? (Liabilities – loans, creditors, outstanding expenses)
3. 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:

• 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 |

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:

A Simple Example (No Invented Data)

Suppose a business has:

• Cash in hand: ₹50,000
• Machinery: ₹2,00,000
• Loan from bank: ₹1,00,000
• Creditors: ₹30,000
• Capital: ₹1,20,000

The Balance Sheet would look like:

Notice: Assets (2,50,000) = Liabilities (1,30,000) + Capital (1,20,000). It balances.

Key Points to Remember for Exams

• The Balance Sheet is prepared after the Profit & Loss Account and the Profit & Loss Appropriation Account (for partnerships/companies).
• It shows the financial position on a specific date – not for a period.
• All real accounts (assets) and personal accounts (liabilities, capital) appear here. Nominal accounts (revenues, expenses) are closed to P&L.
• The order of presentation can be either:
  • Order of Liquidity (most liquid first – cash, debtors, etc.) – used in the vertical format above.
  • Order of Permanence (least liquid first – goodwill, land, buildings) – sometimes used in horizontal format.

A Final Intuition

Think of the Balance Sheet as a photograph. The Profit & Loss Account is a movie – it shows what happened over the whole year. The Balance Sheet freezes the frame at the very end. Everything the business owns (assets) is either funded by outsiders (liabilities) or by the owners (capital). That's why the two sides are always equal – they're just two ways of looking at the same pool of resources.