Page 105 - Office Practice and Accounting 10

Solution:

Gitanjali Hardware
Profit and Loss Account
for the fiscal year 2072/073
Dr. Cr.
Particulars Amount Particulars Amount
To Gross loss 52,000 By Interest on dev. bond 15,000
To House rent 5,000 By Bad debt. recovered 25,000
To Discount 2500 By Commission received 25000
To Advertisement 1500 By Net loss 19000
To Printing 500
expenses
61,500 61,500

Balance Sheet
A balance sheet is a list of the assets and liabilities of a business at a particular date. It is a
statement of financial position in terms of the Capital, Assets and Liabilities of a business
entity. It shows the financial position of any business firm. It is also called position
statement as it shows the entire financial position of the organization at a glance. A trader
needs to know if his business will continue to provide an income for the foreseeable
future. A balance sheet can provide a good indication of the answer to the question.

Unlike a trading and profit and loss account, a balance sheet is not part of double
entry system. After the nominal account balance have been transferred to the trading
and profit and loss account, the only balance left in the ledger are those for assets and
liabilities. The balance sheet is a list of these balance.
Although a balance sheet is not an account, the trading and profit and loss account
and balance sheet are known collectively as the final accounts of a business. It has two
sides –left hand side (Capital and Liabilities) and right hand side (Assets). The capital
and liabilities side contains the credit balances of all personal accounts while assets
side contains debit balances of real and personal accounts. The two sides of balance
sheet must always agree.

Objectives
Objectives of balance sheet are presented as follows:
• To know the financial position of organization at specific time.
• To meet the legal obligation.
• To provide detail information about share capital, revenue and surplus, assets
and other liabilities.

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