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Questions
State any two uses of Balance Sheet.
What are the uses of Balance Sheet.
Explain any three uses of Balance Sheet.
Solution
The main uses of a Balance Sheet for a non-trading organisation are as follows:
- Balance Sheet shows the assets owned by a non-trading organisation.
- It reveals the liabilities of the organisation.
- It depicts the Capital Fund of the organisation.
- It shows the financial position of the organisation.
- It fulfils the statutory requirements as a non-trading organisation is legally required to prepare a Balance Sheet.
Notes
Students should refer to the answer according to their questions.
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What are the features of a Balance Sheet?
A ______ is a statement of assets and liabilities at the end of the period. It shows the financial position of a business on a certain date and represents the third and final stage.
It is a financial statement which sets out the assets and liabilities of a trading or non-trading organisation as on a certain date.
______ is not an account but only a statement of assets and liabilities.
It helps the investor to know the earning capacity and financial health of the firm.
Mr. Tate's financial position on 1 December, 2018 was as follows:
Stock ₹ 4,460; Debtors ₹ 890; Creditors ₹ 2 400; Cash ₹ 500; and Fixed assets ₹ 3,000.
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- During the month of December, 2018, the following transactions took place; Sold goods for cash ₹ 4.000; sold the balance goods on credit for ₹ 3 000; received ₹ 2 000 from debtors; paid ₹ 900 to creditors; withdrew ₹ 400 for personal use; allowed and accounted a direct payment of ₹ 500 by a debtor to one of the creditors.
Draw up a statement of his financial position at the end of the month of December 2018.
The main use(s) of a Balance Sheet for a non-trading organisation is/are ______.
Which of the following is not a feature of Balance Sheet?
All membership fees collected by a non-trading concern must be entered in the assets side of the balance sheet. Justify for or against.
Receipts and payments account serves as the basis for preparing the balance sheet of non-trading organisation.
