Page 181 - DMGT104_FINANCIAL_ACCOUNTING

Unit 8: Financial Statements

2. Balance Sheet prepared in Permanency Order: Balance Sheet prepared under this order is Notes
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 Amount Assets Amount
( ) ( )
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 -----
Unaccrued Incomes ------ Bill Receivable -----
Prepaid Expenses -----
Accrued Incomes -----
Debtors -----
Closing Stock -----
------ ------

Illustration 8: Manufacturing, Trading and Profit & Loss Account and Balance Sheet

From the following Trial Balance of Mr. Aditya, prepare a Trading Manufacturing and Profit &
Loss Account and Balance Sheet as on 31st December, 2007.
Trial Balance
(as on 31st December, 2007)

Particulars Amount Amount
( ) ( )
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 Contd...
Office Rent 8,000 ---
Printing and Stationary 4,000 ---
Bad Debts 4,000 ---
LOVELY PROFESSIONAL UNIVERSITY 175
Sales --- 2,40,000
Land and Buildings 1,20,000 ---
Plant and Machinery 80,000 ---
Depreciation on Plant 8,000 ---
Sundry Debtors 20,000 ---
Sundry Creditors --- 1,20,000
Cash in Hand 20,000 ---
Capital --- 1,72,000
5,32,000 5,32,000