Question

Collect the annual reports of at least two companies. Study the Balance Sheets given in the reports. Which order is followed for arrangement of assets and liabilities in the Balance Sheet of the two companies? Which order do you prefer and why?

Answer 1

Companies Selected:

1. Reliance Industries Ltd.
2. Tata Steel Ltd.

Comparison of the Balance Sheets:

Particulars	Reliance Industries Ltd.	Tata Steel Ltd.
Order of Liabilities	Liquidity Order	Liquidity Order
Order of Assets	Liquidity Order	Liquidity Order

Observation:

Both companies prepare their Balance Sheets in accordance with the Companies Act and follow the order of liquidity for the arrangement of assets and liabilities in their annual reports.

Which order do I prefer and why?

I prefer the order of liquidity because:

1. It presents assets and liabilities in a systematic and logical manner.
2. It helps users understand the company’s financial position more easily.
3. It facilitates comparison between different companies.
4. It is the format prescribed for companies under the Companies Act.

Conclusion:

Both companies follow the order of liquidity in the preparation of their Balance Sheets. This method is more suitable because it ensures uniformity, clarity, and easy analysis of financial statements.