Profit and Loss Account and Balance Sheet of Companies in India

 Part 1 to Schedule VI of the Indian Companies Act, 1956 gives the format in which the balance sheet is to be prepared.

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Form of Balance Sheet

Part 1 to Schedule VI of the Indian Companies Act, 1956 gives the format in which the balance sheet is to be prepared. The schedule gives 2 types of formats, the horizontal format and the vertical format. A company can prepare its balance sheet in either of the 2 formats.  Horizontal format and vertical format are the two.

In the horizontal format, the liabilities including the share capital are placed on the left side and assets of all types on the right. The main heads in this form are arranged as under:

	(a) Share Capital	(a) Fixed assets
	(b) Reserves and surplus	(b) Investments
	(c) Loans	(c) Current assets, loans and advances
	(d) Current liabilities and	(d) Miscellaneous expenditure to the provisions extent not      written off or adjusted
		(e) Profit & Loss Account
	Total

In the vertical format, the various heads of liabilities and assets are arranged vertically and current liabilities are shown as deduction, from current assets. Whatever information is required to be given in the horizontal format must also be given in the vertical format. Summarized prescribed vertical form of balance sheet is given below:

I. Sources of Funds

(1) Shareholders’ funds

(2) Loan funds

Total

II Application of  Funds

(1) Fixed assets
(2) Investments
(3) Current assets, loans and advances      Less: Current liabilities & provisions.
(4)	(a) Miscellaneous expenditure to the extent not written off or adjusted.
	(b) Profit & Loss Account
Total

References

http://www.thebharat.com/legal/companylaw/accounts.html

For various formats

http://www.caclubindia.com/share_files/default.asp

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