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Balance sheet peparation

Brajesh gautam (student) (232 Points)

26 October 2011

Hi evry body happy diwali

Pl explain , what things are to be considered while preparing the balance sheet , this was asked in MNC interview. pl revert ASAP.

thanks

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9 Replies

Bhaskar Unnikrishnan CPA CMA (Accounts / Administration) (414 Points)
Replied 27 October 2011

Generally points to be remembered while preparing final accounts are:

Point 1:
If trial balance is not given in the question, than 1st of all trial balance is to be prepared and if there in any difference, it will be shown in the Balance sheet as Suspense Account.

Point 2:
Items given in the trail balance will be shown once either in Trading Account or Profit and Loss Account or balance Sheet, but adjustments will be shown twice.

Point 3:
Items given in the debit side of trial balance will be shown either in the debit side of Trading Account or Profit and Loss Account or the Asset side of balance.

Point 4:
Items given in the credit side of trial balance will be shown either in the credit side of Trading Account or Profit and Loss Account or in the liabilities side of Balance Sheet.

Point 5:
All the Nominal Accounts whether relate to income or expenditure will be shown either in Trading Account or Profit and Loss Accounts only, not in the Balance Sheet.

Point 6:
The total of both the sides of balance sheet must always be equal.

Point 7;
If trial balance is not given in the equation and it is not clear from various items as they are the incomes or expenditure, they all should be treated as expenditure.

Point 8:
If wages and salaries’ are given under same head, this item will be shown in the Trading Account and if salaries and wages as given under the same head, these items will be shown in profit and loss account.

Point 9:
If some items of expenditure is not clearly shown as factory expenses, they will be shown in profit and loss account and if they are given, these must be shown in Trading account.

Point 10:
Income-tax paid is the personal expenditure of the proprietor hence this item should not be charged to Profit and Loss Account and if it is paid out of business it should be treated as drawings.

Point 11:
Sometimes, some hidden adjustments are given; we should take these considerations into mind while preparing final accounts.

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Nabeel (CA) (3288 Points)
Replied 27 October 2011

Agreed with Bhaskar sir......

I think these points are sufficient enough.......

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 27 October 2011

Right said Bhaskar...........

Brajesh gautam (student) (232 Points)
Replied 27 October 2011

Mr Bhaskar

many 2 thanks to you

Bhaskar Unnikrishnan CPA CMA (Accounts / Administration) (414 Points)
Replied 27 October 2011

My pleasure and you are most welcome...

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Sunil Singh Thakur (AAO) (295 Points)
Replied 27 October 2011

while preparing balance sheet one should see that it gives a true and fair view of state of affairs of the entity as on the date of balance sheet that the assets shown as assets are truly and fairly depicted and the liabilities are stated correctly. Expenses and incomes are properly reflected in the p/l account and expenses are not capitalised. Apart from above statutory compliance viz. compliance with company act etc and Accounting standards are properly implemented.