2. Financial Accounting 1 Lecture – 30 Classification of Investments Long term investments are those investments that are meant to be held for a long term period. If it is decided to dispose off a long term investment, then its classification is changed to current investment from long term.

3. Financial Accounting 2 Lecture – 30 Balance Sheet (Liabilities) ParticularsAmount Rs. ASSETS Non Current Assets Fixed Assets Capital Work In Progress Deferred Costs Long Term Investments Current Assets XXXXXXXXXX TOTALX LIABILITIES Capital and Reserves Capital Reserves Profit and Loss Account XXXXXXX Long Term and Deferred Liabilities Long Term Loans Liability Against Lease Finance Other Long Term Liabilities Deferred Tax XXXXXXXXX Current Liabilities Trade Creditors Short Term Borrowings Other Payables Current Portion of Long Term Borrowings XXXXXXXXX TOTALX

4. Financial Accounting 3 Lecture – 30 LIABILITIES Capital and Reserves Capital Reserves Profit and Loss Account XXXXXXX Long Term and Deferred Liabilities Long Term Loans Liability Against Lease Finance Other Long Term Liabilities Deferred Tax XXXXXXXXX Current Liabilities Trade Creditors Short Term Borrowings Other Payables Current Portion of Long Term Borrowings XXXXXXXXX TOTALX

5. Financial Accounting 4 Lecture – 30 Capital It is the total of resources supplied to a business by its owners. Capital is termed as “Share Capital” in case of Limited Companies.

6. Financial Accounting 5 Lecture – 30 Capital Introduced By Owner In form of Assets DebitFixed Assets Account CreditCapital Account

7. Financial Accounting 6 Lecture – 30 Reserves Reserve is the portion of profit set aside for use in future years for a specific purpose.

8. Financial Accounting 7 Lecture – 30 Profit and Loss / Accumulated Profit and Loss Account It is that portion of the profit that is reemployed in the business. OR This is the accumulated balance of undistributed profit.

9. Financial Accounting 8 Lecture – 30 Accumulated Profit and Loss Account In the first year of business this account shows following figure: Profit for the yearX Less: Transferred to ReserveX Less: Profit distributedX Balance carried to Balance SheetX In Subsequent years balance brought forward from previous years and profit for the year is added and distributed as above and the balance is carried to next year.

10. Financial Accounting 9 Lecture – 30 Long Term Loans Loans that are payable later than a period of more than twelve months from the balance sheet date. Short Term Loans Loans that are payable within twelve months of the balance sheet date.

11. Financial Accounting 10 Lecture – 30 Current Portion of Long Term Loans It is that portion / installment of the long term loan that is payable with in next twelve months.

12. Financial Accounting 11 Lecture – 30 Other Long Term Liabilities These include all other liabilities that are payable after a period of one year of balance sheet date. For example staff gratuity and other benefits, liability against lease finance and other liabilities that become payable after a period of one year.

13. Financial Accounting 12 Lecture – 30 Provision Provision is charge created for an expected expense or loss whose actual amount is not known. It is usually shown as a reduction in the asset to which it relates Reserves Reserve is the portion of profit set aside for use in future years for a specific purpose. It is usually created at the discretion of the owners an is shown as a liability.

14. Financial Accounting 13 Lecture – 30 Current Liabilities Trade Creditors Short Term Borrowings Other Short Term Liabilities oSalaries Payable oAccrued Expenses oBills payable oAdvances From Customers Current Portion of Long Term Liabilities