Balance Sheet Questions for Practice

Balance Sheet Questions for Practice

Balance Sheet Or Statement of Financial Position — The balance sheet is prepared to ascertain the financial position (assets, liabilities, and capital) of an enterprise at a particular point of time.

The balance sheet is a financial statement that shows the financial position of a business enterprise and the nature and values of its assets and liabilities on a particular date.

1. This forms the second part of the final accounts.
2. It is a statement showing the financial position of a business.
3. The balance sheet is prepared by taking up all personal accounts and real accounts (assets and properties) together with the net result obtained from profit and loss account.
4. On the left-hand side of the statement, the liabilities and capital are shown.
5. On the right-hand side, all the assets are shown.
6. The balance sheet is not an account but it is a statement prepared from the ledger balances. So we should not prefix the accounts with the words ‘To’ and ‘By’.

The balance sheet is defined as a statement which sets out the assets and liabilities of a business firm and which serves to ascertain the financial position of the same on any particular date’.(aparticular point of time).

OBJECTIVES OF BALANCE SHEET

The need/objectives for preparing a Balance sheet is as follows:

1. To know the nature and value of assets of the business
2. To ascertain the total liabilities of the business.
3. To know the position of owner’s equity.
4. To help to determine the actual value of the business at the time of sale.
5. It also provides relevant information regarding sources of funds and the application.

Format Of Balance Sheet

ORDER OF PERMANENCE

1. The assets are arranged in the order of their permanence i.e., the least liquid asset (e.g., goodwill) is shown first and the most liquid asset (e.g., Cash-in-hand) is shown last.
2. The least urgent payment to be made (e.g., short-term creditors) is shown last.
3. A company is required to prepare the balance sheet in order of permanence. A general format of a Balance Sheet in the order of performance is shown below :

 

ORDER OF LIQUIDITY

1. The assets are arranged in the order of their liquidity i.e., the most liquid asset (e.g., cash-in-hand), is shown first. The least liquid asset (e.g., goodwill) is shown last.
2. The liabilities are arranged in the order of timing i.e., the liabilities which are to be paid immediately {e.g., Creditors) are shown first and which are to be paid later are shown at last (long-term loans). A general format of a Balance Sheet in order of liquidity is shown below:

Example:

From the following particulars, prepare a balance sheet of Mr. Somesh as at 31st March 2021:
Capital ₹5,50,000
Drawings ₹10,000
Sundry Debtors ₹1,00,000
Sundry Creditors ₹80,000
Loan From Bank₹20,000
Net profit ₹1,60,000
Closing Stock ₹50,000
Plant and Machinery ₹1,50,000
Building ₹1,20,000
Land ₹ 3,00,000
Goodwill ₹ 50,000
Furniture and Fixtures ₹30,000
Solution-

Balance Sheet Questions for Practice (Question 1 to 3)

Question 1

From the following particulars, prepare a balance sheet of Mr. Rachit as at 31st March 2021:

Capital ₹2,50,000
Drawings ₹10,000
Sundry Assets ₹4,00,000
Sundry Liabilities ₹1,00,000
Net profit ₹60,000
Answer: Total of  Balance Sheet₹ 4,00,000

Question 2

From the following particulars, prepare a balance sheet of Mr. Sanchit as at 31st March 2021:

Capital ₹3,50,000
Drawings ₹10,000
Sundry Debtors ₹1,00,000
Sundry Creditors ₹1,00,000
Net profit ₹1,60,000
Closing Stock ₹50,000
Plant and Machinery ₹1,50,000
Building ₹3,00,000
Answer: Total of  Balance Sheet₹ 6,00,000

Question 3

From the following particulars, prepare a balance sheet of Mr. Arachit as at 31st March 2021:

Capital ₹50,000
Drawings ₹4,400
Debtors ₹16,400
Creditors ₹4,200
Cash in hand ₹360
Cash at bank ₹7,200
Furniture ₹13,700
Plant ₹10,000
Net profit ₹11,660
General reserve ₹11,000
Closing stock ₹24,800
Answer: Total of  Balance Sheet₹ 72,460

Balance Sheet Questions for Practice (Question 4 to 6)

Question 4

From the following particulars, prepare a balance sheet of Mr.Vardhan as at 31st March 2021
Capital ₹44,000
Investment ₹20,000
Drawings ₹8,400
Debtors ₹6,400
Creditors ₹4,200
Loan From Vijay ₹20,000
Cash in hand ₹360
Cash at bank ₹7,200
Furniture ₹3,700
Plant₹ 10,000
Net profit ₹1,660
General reserve ₹1,000
Closing stock ₹14,800
Answer: Total of  Balance Sheet ₹62,460

Question 5

From the following particulars, prepare a balance sheet of Mr.Akshat as at 31st March 2021
Capital ₹80,000
Goodwill ₹ 20,000
Prepaid Expenses ₹10,000
Investment ₹20,000
Debtors ₹6,400
Creditors ₹14,200
Loan From Jay ₹20,000
Cash at bank ₹17,200
Furniture ₹3,700
Plant₹ 50,000
Outstanding Expenses ₹10,000
Net profit ₹21,300
General reserve ₹1,000
Closing stock ₹14,800
Bills Receivable ₹25,000
Bills Payable ₹20,000
Advance Income ₹5,000
Drawings ₹4,400
Answer: Total of  Balance Sheet ₹1,67,100

Question 6

From the following particulars, prepare a balance sheet of Sneha as at 31st March 2021
Building₹1,50,000
Land₹2,50,000
Capital ₹4,80,000
Goodwill ₹ 30,000
Prepaid Expenses ₹10,000
Investment ₹40,000
Debtors ₹6,400
Creditors ₹14,200
Loan From Bank ₹20,000
Cash at bank ₹17,200
Furniture ₹13,700
Plant₹ 35,000
Bank overdraft ₹5,000
Net profit ₹51,000
General reserve ₹1,000
Closing stock ₹14,500
Bills Receivable ₹25,000
Bills Payable ₹30,000
Advance Income ₹5,000
Drawings ₹14,400
Answer: Total of  Balance Sheet ₹5,91,800

Balance Sheet Questions for Practice (Question 7 and 8)

Question 7
From the following particulars, prepare a balance sheet as at 31st March 2021
Land and Building ₹3,00,000
Loan from Bank ₹4,00,000
Outstanding Expenses ₹1,200
Drawings ₹72,000
Net Profit ₹43,000
Investments ₹1,50,000
Computers ₹70,000
Furniture ₹55,000
Creditors ₹80,000
Debtors ₹72,000
Closing Stock₹1,25,000
Bills Receivable ₹15,500
Bills Payable ₹25,300
Cash in Hand ₹ 15,700
Prepaid Expenses ₹3,600
Capital ₹4,50,200
Bank ₹16,000
Machinery ₹85,000
Motor Car₹22,200
Income Received in Advance₹2,300
Answer: Total of  Balance Sheet ₹9,30,000

Question 8
From the following particulars, prepare a balance sheet as at 31st March 2021:

Capital ₹2,59,000
creditors ₹52,000
Cash in Hand ₹49,000
Outstanding Expenses ₹25,000
Cash at Bank ₹30,000
Drawings ₹10,000
Investments ₹15,000
Net Profit ₹70,000
Bank Overdraft₹13,000
Closing Stock ₹20,000
Fixed Assets ₹ 2,94,000
Bills Payable ₹24,000
Debtors₹25,000
Answer: Total of  Balance Sheet ₹4,33,000

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