Balance
Sheet | Bank Exam Preparation
Balance Sheet
Introduction of Balance Sheet
Balance sheet is that financial statement which is able to
present assets, capital and liabilities of organization at any point of time.
It is not a ledger but a statement only. It is description of source & use
of fund. It is major component of financial statement as well as final output
of accounting which is used to provide information to the stakeholder. It shows financial status of the firm, so balance sheet is
known as financial position indicator of the firm.
Method of
Making Balance Sheet
·
Before making balance sheet we have to prepare income statement
in order to find out net profit/loss or surplus/deficit.
·
If there is provision of regulator than it is mandatory to use
format prescribed by such entity otherwise format of accounting standard is
applicable to make balance sheet.
·
All capital nature transaction should be classified as per
liquidity base or rigidity base for the preparation of balance sheet.
·
Organization can use traditional “T” format or modern vertical format.
|
Capital
& Liabilities |
A.N. |
Amount |
Assets |
A.N. |
Amount |
|
Share
Capital |
|
Fixed
assets |
1200000 |
||
|
Total |
2400000 |
2400000 |
Balance
Sheet in Bank and Financial Institution
·
Before making balance sheet we have to prepare income statement
in order to find out net profit/loss or surplus/deficit.
·
In Nepal Bank and FIs prepare balance sheet as per unified
directive no 4, issued by central bank for licensed bank and FIs.
·
All elements of assets side should be classified as per
liquidity base but rigidity base for the elements of capital and liabilities of
balance sheet. So, it is prepared under hybrid concept.
·
Bank use vertical format for the preparation of balance sheet.
|
S.N. |
Particulars |
Annexture
no. |
Amount
in crore |
|
1.0 |
Total
Capital & Liabilities |
|
|
|
2. |
Total
Assets |
18000 |
Importance of Balance Sheet
·
To Present net worth of the firm
·
To provide information to the stakeholder
·
To know about solvency capacity of the organization
·
To show financial status or health or position of the firm
·
To support for auditing activities
·
To maintain transparence and accountability
·
To maintain financial discipline
·
For the strengthens of internal control system
·
To present capital nature transaction
·
To calculate ratio of the firm
·
To follow rules and regulation and to avoid legal punishment
·
To maintain corporate governance
Limitation of Balance Sheet
·
Lack of independency because balance sheet depends upon trial
balance
·
Difficult to adjust additional information which are given
outside of the trial balance
·
Difficult to prepare balance sheet under cash basis accounting
concept
·
Marshaling of transaction is complex task
·
Lack of consistency because it is art of presenting financial
transaction
·
Difficult to prepare and tedious
·
Time consuming and expensive method
·
Can’t prepare under single entry system
·
Lack of qualitative system
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