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Classification of Assets & Liabilities

Liabilities Assets
Liability toward promoters i.e. Fixed Assets Net worth/ Equity (Such as land and building, Share capital/partners' plant machinery etc.) capital/paid-up Original value capital/owners funds Less deprecation Paid-up capital + reserves Net worth Reserves (General Reserve, Net value or book value or Capital Reserves which are not available for Capital Reserve, Revaluation written down value reserves Reserve and Other (These are purchased fordistribution among shareholders such as share long term use and are depreciated premium reserve. Reserves) (These funds are brought in by every year) Reserve available for distribution among the General the promoters as their shareholders. These are created out of profit. reserves investment in business or generated by and retained in Net worth - intangible assets. business) Tangible Net Non Current Assets Liability towards outsiders worth Investment of long term Long term liabilities Liability which may or may not arise. Depends Contingent nature in shares, govt, Term Loan (Banks or on happening of an event. Shown as footnote liability securities, associate or sister Institutions) of balance sheet. firms or companies. Debentures/ Bonds Intangible/disputed Assets which have notional value only, as pre Old stocks or old Unsecured Loans asset operative expenses, patents etc. book debts Fixed Deposits Non-current Neither current assets nor fixed or fictitious Other Long Term Liabilities Long term security deposits. assets. assets (Only those liabilities to be taken Other misc. assets which are These may include loans given, security which are not due for payment not current or fixed assets deposits, investments etc. within 12 months from date of Net profit + depreciation Cash profit the balance sheet) Net loss - depreciation Cash loss


Intangible Assets Gross profit

Current Assets which change their shape/form within finished goods, stores and 12 months. Cash becomes raw material cash is sparesAssets consumption) meant for used Advance payment of taxes, for purchase of raw material. These are pre-paid expenses also called working capital or gross working (Only those liabilities to be taken Other assets of current capital which are due for payment within natureQuick assets Assets which are either ready cash or can be 12 months from date of the converted into cash quickly (include cash and balance sheet) bank balances, fixed deposits in banks, current receivables or book debts, marketable and quoted govt, or non-govt. securities). These are also calculated as current assets less stocks and prepaid expenses. Investments Investments in govt, securities treated current asset when these are marketable and due. Investments in other securities treated noncurrent if they are not quoted and investment in allied/associated units to be treated as noncurrent. Authorised Maximum amount of capital that a company Profit or Loss Profit becomes part of net worth as general capital can raise as per its MoA. reserve. Loss becomes intangible assets, as Issued capital Part of the authorised capital for which accumulated loss. subscription is invited from the shareholders. Loans & Loans & advances unless stated to be of long advances term are part of current assets. Subscribed Face value of shares that are subscribed by the TL Installment of term loan payable in 12 months capital shareholders out of the issued capital. instalments is to be taken as current liability only for calculation of current ratio and quick ratio. Amount paid by the share-holder towards the Paid-up called/subscribed capital. capital Bonus OR Bonus shares are issued to debit of general 1 rights share reserves . These do not affect the net worth. With rights issue, change takes place in net worth since there is fresh infusion of funds as net worth. Original cost of fixed assets - depreciation Net block
Previsions against various items Other Current Liabilities

Liability towards outsiders Current Assets Current liabilities Short term Short term or Current Liabilities Cash/Bank balance including sources Bank working capital limits fixed deposits such as cash credit, over draft, Marketable/quoted govt, orassets + non-current assets + intangible Long term Fixed bills, export credit. other securities meant for sale uses assets Sundry/trade Book debts /term Current assets Short Sundry creditors/creditors/bills debtors / debtors / uses payable receivables / bills receivables Current Liabilities which have either become due for Short duration loans or (outstanding up to 180 days) liabilities payment or shall fall due for payment within 12 deposits Stocks / inventory (such as months Expenses payable raw material, stock in process, date of balance sheet

Net sales less cost of sales. Patents, good will, debit Goodwill Fictitious balance of P & L account, asset preliminary or preoperative Net worth + iong term liabilities Long term expensive


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