Arrange the following under the heading Equities and Liabilities in balance sheet of a company.
(A) Non-current liabilities
(B) Current liabilities
(C) Shareholders fund
(D) Share application money pending allotment
Choose the correct answer from the options given below:
Arrange the following under the heading Equities and Liabilities in balance sheet of a company.
(A) Non-current liabilities
(B) Current liabilities
(C) Shareholders fund
(D) Share application money pending allotment
Choose the correct answer from the options given below:
Solution
Arrangement of Items under Equities and Liabilities
As per Schedule III of the Companies Act, 2013, the Balance Sheet of a company follows a specific order for presenting items under "Equities and Liabilities".
Standard Format Order:
1. Shareholders' Funds (C)
- This appears first and includes Share Capital and Reserves & Surplus
- Represents the owners' equity in the company
2. Share Application Money Pending Allotment (D)
- Money received from applicants for shares but allotment is pending
- Shown separately until shares are formally allotted
3. Non-Current Liabilities (A)
- Long-term obligations not due within one year
- Includes long-term borrowings, deferred tax liabilities, long-term provisions
4. Current Liabilities (B)
- Obligations due within one year or operating cycle
- Includes short-term borrowings, trade payables, short-term provisions
Correct Sequence:
The arrangement follows the principle of permanence, starting with the most permanent source (Shareholders' Funds) and ending with the most temporary (Current Liabilities).
Order: (C) → (D) → (A) → (B)
This corresponds to Option 3: (C), (D), (A), (B)
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