Page 25 - DCOM302_MANAGEMENT_ACCOUNTING

Management Accounting

Notes Balance Sheet prepared in Permanency Order

Balance Sheet prepared under this order is the reverse of the Balance Sheet prepared in liquidity

order. In this case first those assets are shown which are more permanent means fixed assets and

then less permanent assets (Current Assets) are shown. Similarly, first long-term liabilities (more
permanent) are shown then less permanent (short-term on current) liabilities are shown. The
proforma of such type of Balance Sheet is given below:
Proforma of Balance Sheet in Permanency Order
(as on ……………. )

Liabilities ` Assets `
Long-term Liabilities Fixed Assets
Capital ------ Land & Building -----
(+) Net Profit ------ Plant & Machinery -----

------ Furniture -----
(–) Drawings ------ ------ Long-term Investment -----
Long-term Loans ------ Goodwill -----
Current Liabilities Patents & Trademarks -----
Sundry Creditors ------ Livestock etc. -----
Bank Overdraft ------ Current Assets
Bill Payable ------ Cash in Hand -----
Short-term Loan ------ Cash in Bank -----
Outstanding Expenses ------ Short-term Investments -----
Un-accrued Incomes ------ Bill Receivable -----
Prepaid Expenses -----
Accrued Incomes -----
Debtors -----
Closing Stock -----
------ -----

Example: From the following Trial Balance of Mr. Aditya, prepare a Trading

Manufacturing and Profit and Loss Account and Balance Sheet as on 31st December, 2007.
Trial Balance
(as on 31st December, 2007)
Particulars ` `
Stock on 1.1.2007:
Raw Materials 8,000 ---
Work-in-Progress 20,000 ---
Finished Goods 40,000 ---
Manufacturing Wages 40,000 ---
Purchases of Raw Materials 1,20,000 ---
Factory Rent 20,000 ---
Carriage of Raw Materials 12,000 ---
Salary of the Works Manager 8,000 ---
Offi ce Rent 8,000 ---
Contd…

20 LOVELY PROFESSIONAL UNIVERSITY