Page 180 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting

Notes Balance sheet of Mr. Gopal as on 31.3.2011
Liabilities ( ) Assets ( )
( ) Machinery 40,000
Capital 2,25,000 Furniture 10,000
+ Net profi 1,19,000 Land and Buildings 2,00,000
3,44,000 Debtors (30,000) 30,000
– Drawings –25,000 B/R 15,000
– Creditors 3,19,000 Stock 20,000

B/P 17,500 Bank 25,000
3,500
3,40,000 3,40,000

Marshalling of Assets and Liabilities

Order of presenting the assets and liabilities in the Balance Sheet is called marshalling of assets
and liabilities. A Balance Sheet may be prepared by marshalling the assets and liabilities in the
following orders:
1. Balance Sheet prepared in Liquidity Order: Here liquidity means conversion of assets into
cash. When a Balance Sheet is prepared on the basis of liquidity order, more easily
convertible assets into cash are shown first and those assets which cannot be easily converted
into cash are shown later and so on. In the case of liabilities, first those liabilities are
shown which are payable earlier and then those liabilities are shown which are payable
later. The proforma of such a Balance Sheet is given.
Proforma of Balance Sheet in Order of Liquidity
(as on …………………..)

Liabilities Amount Assets Amount
( ) ( )
Current Liabilities Current Assets
Sundry Creditors ------ Cash in Hand ------
Bank Overdraft ------ Cash at Bank ------
Short-term Loan ----- Short-term Investment ------
Outstanding Expenses ----- Prepaid Expenses ------
Unaccrued Income ----- Bills Receivable ------
Bills Payable ----- Accrued Incomes ------
Long-term Liabilities Debtors ------
Capital ------- Closing Stock ------
+ Net Profit ------- Fixed Assets
------- Land & Building -----
- Drawings ------- ----- Plant & Machinery -----
Long-term Loans ----- Furniture -----
Contingent Liabilities Investments (Long-term) -----
------- Goodwill ------
------- Patents & Trademarks ------
Livestock ------
------- -------

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