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What is meant by grouping and marshaling assets and liabilities? - Accountancy

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What is meant by grouping and marshaling assets and liabilities?

थोडक्यात उत्तर
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उत्तर

  1. The assets and liabilities shown in the balance sheet are grouped and presented in a particular order.
  2. The term ‘grouping’ means showing the items of similar nature under a common heading.
  3. For example, the amount due from various customers will be shown under the head ‘Sundry debtors/ Similarly, under the head ‘Current assets’, the balance of cash, bank, debtors, stock, and other current assets will be shown.
  4. ‘Marshalling’ is the arrangement of various assets and liabilities in proper order.
  5. Marshaling can be made in one of the following two ways:
  • In the order of liquidity:

  1. According to this method, an asset which is most easily convertible into cash, i.e., cash in hand is shown first and then will follow those assets which are comparatively less easily convertible, So that the least liquid asset i.e., goodwill is shown last.
  2. In the same way, the liabilities which are to be paid at the earliest will be shown first. In other words, current liabilities are shown first, then fixed or long-term liabilities, and finally the proprietor’s capital.
  • In the order of permanence:

  1. This method is exactly the reverse of the first method.
  2. An asset which is more permanent, i.e., goodwill is shown first followed by assets which are less permanent. Similarly, those liabilities which are to be paid last will be shown first.
  3. In other words, the proprietor’s capital is shown first, then fixed or long-term liabilities, and lastly the current liabilities. Joint-stock companies are required under the Companies Act to prepare their balance sheet in the order of permanence.
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पाठ 12: Final Accounts of Sole Proprietors - 1 - Short answer questions [पृष्ठ २६४]

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सामाचीर कलवी Accountancy [English] Class 11 TN Board
पाठ 12 Final Accounts of Sole Proprietors - 1
Short answer questions | Q III 6. | पृष्ठ २६४

संबंधित प्रश्‍न

Answer in One Sentence:
What is Depreciation?


State True or False with reasons :
In every adjustment atleast there are three effects.


State True or False with reasons :
Goodwill is not a fictitious asset


Do you agree or disagree with the following statement:
Capital is excess of Liabilities over Assets.


Bank overdraft should be shown ______.


Mention any two differences between trial balance and balance sheet.


“Balance sheet is not an account” – Explain.


What are the advantages of preparing a balance sheet?


From the following particulars, prepare balance sheet in the books of Bragathish as on 31st December, 2017:

Particulars Particulars
Capital 80,000 Cash in hand 20,000
Debtors 12,800 Net profit 4,800
Drawings 8,800 Plant 43,200

Chennai tennis club had a Match fund showing a credit balance of ₹ 24,000 on 1st April, 2018. The receipt to the fund during the year was ₹ 26,000. Match expenses incurred during the year was ₹ 33,000. How these items will appear in the final accounts of the club for the year ended 31st March, 2019?


How will the following appear in the final accounts of Karaikudi sports club for the year ending 31st March, 2019?

Particulars
Tournament fund on 1st April 2018 90,000
Tournament fund investment on 1st April 2018 90,000
Interest received on tournament fund investment 9,000
Donation to tournament fund 10,000
Tournament expenses 60,000

Compute capital fund of Salem Sports Club as on 1.4.2019.

Particulars Particulars
Sports equipment 30,000 Prize fund 10,000
Computer 25,000 Prize fund investments 10,000
Subscription outstanding for 2018-19 5,000 Cash in hand 7,000
Subscription received in advance for 2019-20 8,000 Cash at bank 21,000

From the following Receipts and Payments account of Sivakasi Pensioner’s Recreation Club, prepare income and expenditure account for the year ended 31st March, 2018 and the balance sheet as on that date.

Dr. Receipts and Payments Account for the year ended 31st March, 2018 Cr.
Receipts Payments
To balance b/d     By Rent and rates 18,000
Cash in hand 10,000   By Electricity charges 17,000
Cash at bank 20,000 30,000 By Furniture purchased 12,000
To Subscription     By Billiards table purchased 70,000
2016 – 2017 5,000   By Repairs and renewals 16,000
2017 – 2018 25,000   By Special dinner expenses 4,000
2018 – 2019 6,000 36,000 By Special dinner expenses 2,000
To Legacies   40,000 By Balance c/d  
To Rent from hall   14,000 Cash in hand 1,000
To Lockers rent   5,000    
To Collection for special dinner   12,000    
To Balance c/d        
Bank overdraft   3,000    
    1,40,000   1,40,000

Additional information:

  1. The club had 300 members each paying ₹ 100 as annual subscription.
  2. The club had furniture ₹ 10,000 on 1.4.2017.
  3. The subscription still due but not received for the year 2016 – 2017 is ₹ 1,000.

Following is the Receipts and payments account of Virudhunagar Volleyball Association for the year ended 31st December, 2018.

Dr. Receipts and Payments Account for the year ended 31st December, 2018 Cr.
Receipts Payments
To balance b/d     By Match expenses   25,000
Cash in hand   5,000 By Upkeep of pavilion   17,000
To Subscription     By Secretary’s honorarium   18,000
2017 10,000   By Bats and balls purchased   22,000
2018 55,000   By Grass seeds   2,000
2019 5,000 70,000 By Fixed deposit   58,000
To Donations   40,000 By Sundry expenses   3,000
To Match fund receipts   30,000 By Balance c/d    
To Interest on fixed deposit   8,000 Cash in hand 7,000  
To Miscellaneous receipts   5,000 Cash at bank 6,000 13,000
    1,58,000     1,58,000

Additional information:

  1. On 1.1.2018, the association owned investments ₹ 10,000, premises and grounds ₹ 40,000, stock of bats and balls ₹ 5,000.
  2. Subscription ₹ 5,000 related to 2017 is still due.
  3. Subscription due for the year 2018, ₹ 6,000.

Prepare income and expenditure account for the year ended 31st December, 2018 and the balance sheet as on that date.


Annual Insurance Premium ₹ 8,000 is paid on 1st Dec 2018. Calculate the amount of Insurance Premium for the accounting year ending on 31st March 2019.


Calculate the amount of gross profit and operating profit on the basis of the following balances extracted from the books of M/s Rajiv & Sons for the year ended March 31, 2017.

 
Opening stock 50,000
Net sales 11,00,000
Net purchases 6,00,000
Direct expenses 60,0000
Administration expenses 45,000
Selling and distribution expenses 65,000
Loss due to fire 20,000
Closing stock 70,000

Why is the balance sheet prepared "as on" a date, not "for the year ended"?


How are adjustments like outstanding expenses or prepaid expenses reflected in the balance sheet?


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