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What is meant by grouping and marshaling assets and liabilities?

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प्रश्न

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

Give a word, term, or phrase which can substitute the following statement:
An additional information provided below the Trial Balance.


Select the most appropriate alternatives given below and rewrite the sentence :
____________ is excess of assets over liabilities


Select the most appropriate alternatives given below and rewrite the sentence :
______________ is a statement which shows the financial position of business on a specific date.


Select the most appropriate alternatives given below and rewrite the sentence :

When Specific date is not given, in that case interest on drawing is charged for __________ month.

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


Bank overdraft should be shown ______.


Prepare trading and profit and loss account and balance sheet in the books of Deri, a trader, from the following balances as of March 31, 2018.

Particulars Particulars
Stock 10,000 Sales 1,22,500
Cash 2,500 Creditors 5,000
Bank 5,000 Bills payable 2,000
Freight inwards 750 Capital 52,000
Purchases 95,000    
Drawings 4,500
Wages 27,500
Machinery 50,000
Debtors 13,500
Postage (office) 150
Sundry expenses 850
Rent paid 2,500
Furniture 17,250
  2,29,500   2,29,500

Closing stock (31st March, 2018) ₹ 8,000.


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

From the following Receipts and Payment account of Yercaud Youth Association, prepare Income and expenditure account for the year ended 31st March, 2019 and the balance sheet as on that date.

Receipts Payments
To Balance b/d   By Salary 14,000
Cash in hand 9,600 By Office expenses 7,200
To Government grants for purchase of books 10,000 By Books purchased 15,000
To Subscription 24,800 By Stationery purchased 1,800
To Admission fees 2,000 By Newspaper purchased 2,100
To Prize fund receipts 6,000 By Prizes awarded 5,000
To Bank interest 1,500 By Balance c/d  
To Sale of newspapers 1,100 Cash in hand 9,900
  55,000   55,000

Additional information:

  1. Opening capital fund ₹ 20,000.
  2. Stock of books on 1.4.2018 ₹ 9,200.
  3. Subscription due but not received ₹ 1,700.
  4. Stock of stationery on 1.4.2018 ₹ 1,200 and stock of stationery on 31.3.2019, ₹ 2,000.

Following is the Receipts and Payments account of Neyveli Science Club 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 Balance b/d    
Cash in hand 2,400 Bank overdraft   1,000
To Subscription 8,700 By Postage expenses   200
To Life membership fees 5,000 By Science equipments purchased   10,000
To Exhibition fund receipts 7,000 By Laboratory expenses   2,400
To Sale of science equipments (Book value ₹ 5,000) 6,000 By Secretary’s honorarium   5,000
To Miscellaneous income 500 By Audit fees   3,600
    By General charges   1,800
    By Exhibition expenses   5,000
    By Balance c/d    
    Cash in hand 200  
    Cash at bank 400 600
  29,600     29,600

Additional information:

  1. Opening capital fund ₹ 6,400
  2. Subscription includes ₹ 600 for the year 2019
  3. Science equipment as on 1.1.2018 ₹ 5,000
  4. Surplus on account of exhibition should be kept in reserve for new auditorium.

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


Discuss the need of preparing a balance sheet


What is meant by Grouping and Marshalling of assets and liabilities? Explain the ways in which a balance sheet may be marshalled.


The machinery of ₹ 35,500 is purchased on 1st July 2018 and on the same day ₹ 4,500 are spent on the installation of the Machinery. The proprietor has decided to Depreciate Machinery at the rate of 7% p.a. Calculate the amount of depreciation, assuming that accounting year is ending on 31st March every year.


Which section does NOT appear on a balance sheet?


Why must a balance sheet always tally?


Which adjustment will affect both the Trading/Profit & Loss account and Balance Sheet?


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