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प्रश्न
What is meant by grouping and marshaling assets and liabilities?
उत्तर
- The assets and liabilities shown in the balance sheet are grouped and presented in a particular order.
- The term ‘grouping’ means showing the items of similar nature under a common heading.
- For example, the amount due from various customers will be shown under the head ‘Sundry debtors/ Similarly, under the head ‘Current assets’, the balance of cash, bank, debtors, stock, and other current assets will be shown.
- ‘Marshalling’ is the arrangement of various assets and liabilities in proper order.
- Marshaling can be made in one of the following two ways:
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In the order of liquidity:
- According to this method, an asset which is most easily convertible into cash, i.e., cash in hand is shown first and then will follow those assets which are comparatively less easily convertible, So that the least liquid asset i.e., goodwill is shown last.
- In the same way, the liabilities which are to be paid at the earliest will be shown first. In other words, current liabilities are shown first, then fixed or long-term liabilities, and finally the proprietor’s capital.
-
In the order of permanence:
- This method is exactly the reverse of the first method.
- An asset which is more permanent, i.e., goodwill is shown first followed by assets which are less permanent. Similarly, those liabilities which are to be paid last will be shown first.
- In other words, the proprietor’s capital is shown first, then fixed or long-term liabilities, and lastly the current liabilities. Joint-stock companies are required under the Companies Act to prepare their balance sheet in the order of permanence.
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संबंधित प्रश्न
Select the most appropriate alternatives given below and rewrite the sentence :
____________ is excess of assets over liabilities
State True or False with reasons :
Goodwill is not a fictitious asset
Balance sheet shows the ______ of the business.
What are the advantages of preparing a balance sheet?
From the following Receipts and Payment account of Yercaud Youth Association, prepare Income and expenditure account for the year ended 31st March, 2019 and the balance sheet as on that date.
Receipts | ₹ | Payments | ₹ |
To Balance b/d | By Salary | 14,000 | |
Cash in hand | 9,600 | By Office expenses | 7,200 |
To Government grants for purchase of books | 10,000 | By Books purchased | 15,000 |
To Subscription | 24,800 | By Stationery purchased | 1,800 |
To Admission fees | 2,000 | By Newspaper purchased | 2,100 |
To Prize fund receipts | 6,000 | By Prizes awarded | 5,000 |
To Bank interest | 1,500 | By Balance c/d | |
To Sale of newspapers | 1,100 | Cash in hand | 9,900 |
55,000 | 55,000 |
Additional information:
- Opening capital fund ₹ 20,000.
- Stock of books on 1.4.2018 ₹ 9,200.
- Subscription due but not received ₹ 1,700.
- Stock of stationery on 1.4.2018 ₹ 1,200 and stock of stationery on 31.3.2019, ₹ 2,000.
Following is the Receipts and payments account of Virudhunagar Volleyball Association for the year ended 31st December, 2018.
Dr. | Receipts and Payments Account for the year ended 31st December, 2018 | Cr. | |||
Receipts | ₹ | ₹ | Payments | ₹ | ₹ |
To balance b/d | By Match expenses | 25,000 | |||
Cash in hand | 5,000 | By Upkeep of pavilion | 17,000 | ||
To Subscription | By Secretary’s honorarium | 18,000 | |||
2017 | 10,000 | By Bats and balls purchased | 22,000 | ||
2018 | 55,000 | By Grass seeds | 2,000 | ||
2019 | 5,000 | 70,000 | By Fixed deposit | 58,000 | |
To Donations | 40,000 | By Sundry expenses | 3,000 | ||
To Match fund receipts | 30,000 | By Balance c/d | |||
To Interest on fixed deposit | 8,000 | Cash in hand | 7,000 | ||
To Miscellaneous receipts | 5,000 | Cash at bank | 6,000 | 13,000 | |
1,58,000 | 1,58,000 |
Additional information:
- On 1.1.2018, the association owned investments ₹ 10,000, premises and grounds ₹ 40,000, stock of bats and balls ₹ 5,000.
- Subscription ₹ 5,000 related to 2017 is still due.
- Subscription due for the year 2018, ₹ 6,000.
Prepare income and expenditure account for the year ended 31st December, 2018 and the balance sheet as on that date.
Discuss the need of preparing a balance sheet
What is meant by Grouping and Marshalling of assets and liabilities? Explain the ways in which a balance sheet may be marshalled.
Mr. Pramod borrowed a Loan from the State Bank of India ₹ 3,50,000 on 1st Oct. 2018 at the rate of interest of 12% p.a. Calculate the Interest on a bank loan for the year 2018-19, assuming that the financial year-end on 31st March every year.
Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv & Sons for the year ended March 31, 2017.
₹ | |
Opening stock | 50,000 |
Net sales | 11,00,000 |
Net purchases | 6,00,000 |
Direct expenses | 45,000 |
Administration expenses | 45,000 |
Selling and distribution expenses | 65,000 |
Loss due to fire | 20,000 |
Closing stock | 70,000 |