WPP Presentation

VERTICAL BALANCE SHEET. BY KRISH LOHANA.

WHY IS A VERTICAL BALANCE SHEET PREPARED?. A Vertical Balance Sheet is prepared as it is easy for the reader or viewer to understand and analyze them. It is easier to explain and present to higher authorities. In Horizontal Balance Sheet, we cannot distinguish between Shareholder's Fund and Borrowed Fund but we can do so in a vertical balance sheet. In short, Vertical Balance Sheet is a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period..

TERMS RELATING TO VERTICAL BALANCE SHEET. Let's discuss some important terms which will help in clearing the topic. 1) Shareholder's Fund or Owner's Fund - It is the fund which is available for distribution with the shareholders. It Includes Share Capital, Reserves and Surplus and fictitious assets are subtracted to get Net Worth. Let us understand share capital, reserves and surplus & fictitious assets - a. Share Capital - It is the part of the capital of a company that comes from the issue of shares. It includes Equity Share Capital and Preference Share Capital. b. Reserves and Surplus - Reserves and surplus, as the name suggests, are the accumulated profits that a company has earned and retained overtime. It Includes General Reserve, Profit and Loss A/c (Cr. Balance),etc..

TERMS RELATING TO VERTICAL BALANCE SHEET. c. Fictitious Assets - Fictitious assets are expenses & losses which for some reason are not written off during the accounting period of their incidence. They are not assets at all, however, they are shown as assets in the financial statements only for the time being. They are written off against the firm’s earnings in more than one accounting period. Basically, they are amortized over a period of time. They are recorded as assets in financial statements only to be written off in a future period. Examples include Preliminary Expenses, Promotional expenses of a business, discount allowed on issue of shares ,Loss incurred on issue of debentures, Profit & Loss A/c debit balance. After deducting Fictitious assets from Shareholder's Fund, we get Net Worth..

TERMS RELATING TO VERTICAL BALANCE SHEET. 2) Borrowed Fund/Loan Funds - These are the funds which are borrowed from sources like Bank. This is the reason that they are called as Loan Funds. Secured Loans and Unsecured Loans together form borrowed fund. Let us learn about them in detail. a. Secured Loans - A secured loan means you are providing security that your loan will be repaid. It includes term loans from banks and other secured loans. b. Unsecured Loans - Unsecured loans ,sometimes referred to as signature loans or personal loans, are approved without the use of property or other assets as collateral. In short, Unsecured Loans means the loans provided without any security..

TERMS RELATING TO VERTICAL BALANCE SHEET. 3) Capital Employed - It is obtained after totalling the Shareholder's Funds and Borrowed Funds. Capital employed, also known as funds employed, is the total amount of capital used for the acquisition of profits by a firm or project. 4) Applications of Funds - It simply means uses of funds. We first ascertain our funds and then use them to purchase assets and investments. 5) Fixed Assets - The Fixed assets are long-term assets that a company has purchased and is using for the production of its goods and services. Fixed assets include tangible assets such as property, plant, equipment, furniture and fixtures ,etc and intangible assets such as patents, goodwill, trademark,etc..

TERMS RELATING TO VERTICAL BALANCE SHEET. a. Tangible Assets - The assets which can be touch and felt with hands are called as Tangible Assets. For Example- Plant, Machinery, Land, Building, Furniture, Loose Tools, Fixtures, Books, etc. b. Intangible Assets - The assets which cannot be seen or felt with hands are called as intangible assets. For Example- Goodwill, Copyright, Patent, Trademark, Designs, etc. 6) Investments/Non-Current Investment - The investments whose full value is not realized within the accounting year. In short, the investments whose values are realized in more than one accounting year are Non- Current Investments. Examples include- Government Securities, Bonds, Debentures, Long term Loans, Capital of Partnership Firms, etc..

TERMS RELATING TO VERTICAL BALANCE SHEET. 7) Working Capital - Working capital is a measure of a company's liquidity, operational efficiency and its short-term financial health. If a company's current assets do not exceed its current liabilities, then it may have trouble growing or paying back creditors, or even go bankrupt. In short, i t is the difference between a company's current assets and its current liabilities. 8) Current Assets - In accounting, a current asset is any asset which can reasonably be expected to be sold, consumed, or exhausted through the normal operations of a business within the financial year. It is further divided into quick and non-quick assets..

TERMS RELATING TO VERTICAL BALANCE SHEET. a. Quick Assets - The current assets which can be quickly converted into cash are called as Quick Assets. For Example- Debtors, Cash in hand, Cash at Bank, Bills Receivable, etc. b. Non-Quick Assets - The current assets which cannot be easily converted into cash are called as Non-Quick Assets. For Example- Stock, Prepaid Expenses, Advance Tax, etc. 9) Current Liabilities - In accounting, current liabilities are often understood as all liabilities of the business that are to be settled in cash within the financial year. It is further divided into Quick and Non- Quick Liabilities..

TERMS RELATING TO VERTICAL BALANCE SHEET. a. Quick Liabilities - The current Liabilities that can quickly be settled in cash are known as quick liabilities. For Example- Creditors, Bills Payable, Trade Charges, etc. b. Non-Quick Liabilities - The liabilities which cannot be quickly settled for cash are Non- Quick Liabilities. For Example- Bank Overdraft. 10) Total Funds Applied/Capital Employed - Capital employed, also known as funds employed or total funds applied, is the total amount of capital used for the acquisition of profits by a firm or project. Capital employed can also refer to as the value of all the assets used by a company to generate earnings..

EQUATIONS OF VERTICAL BALANCE SHEET. 1. Shareholder's Funds/Net Worth = Share Capital + Reserves & Surplus - Fictitious Assets (Preliminary Expenses). 2. Borrowed/Loan Funds = Secured Loans + Unsecured Loans. 3. Capital Employed/Total Funds Available = Shareholder's Funds/Net Worth + Borrowed Fund. 4. Fixed Assets = Tangible Assets+ Intangible assets. 5. Working Capital = Current Assets - Current Liabilities 6. Current Assets = Quick Assets + Non Quick Assets 7. Current Liabilities = Quick Liabilities + Non Quick Liabilties 8. Total Funds Applied/Capital Employed= Fixed Assets + Investments + Working Capital..

vertical-form-of-balance-sheet-and-income-statement-12-638.

kadu and bros. PRACTICAL PROBLEM.

LETS TAKE A SMALL TEST. Let's understand which balance will go where through this small Multiple Choice Questions Test. So, in reference to the question in previous slide, answer the following questions. 1. Cash at Bank of Rs 6000 is a ___ A. Quick Asset B. Non-Quick Asset C. Quick Liability D. Non-Quick Liability 2. Land and Building Rs 40000 is a ___ and ____ asset. A. Fixed And Tangible Asset B. Fixed And Intangible Asset C. Current And Quick Asset D. Current And Non-Quick Asset.

LETS TAKE A SMALL TEST. 3. Prepaid Expense of Rs 10000 is a ___ and ___ asset. A. Fixed And Tangible Asset B. Fixed And Intangible Asset C. Current And Quick Asset D. Current And Non-Quick Asset 4. Stock of Rs 30000 is a _____ A. Fixed And Tangible Asset B. Fixed And Intangible Asset C. Current And Quick Asset D. Current And Non-Quick Asset 5. Trade Creditors of Rs 8000 is a _____ A. Quick Asset B. Non-Quick Asset C. Quick Liability D. Non-Quick Liability.

LETS TAKE A SMALL TEST. 6. General Reserve will go to ____ head under Shareholder's Fund. A. Share Capital B. Reserves & Surplus C. Fictitious Assets D. None of these 7. Debtors is considered as a ______. A. Quick Assets B. Quick Liabilities C. Non-Quick Assets D. Non-Quick Liabilities 8. Preliminary Expenses will go in __ head under Shareholder's Fund. A. Share Capital B. Fictitious Assets C. Reserves & Surplus D. None of these.

LETS TAKE A SMALL TEST. 9. Plant & Machinery will go under ___ head under Application of funds A. Fixed & Tangible Assets B. Current & Quick Assets C. Fixed & Intangible Assets D. Current & Non-Quick Assets 10. Term Loan from Bank is a _ Loan & comes under ___ head. A. Unsecured Loan , Borrowed Fund. B. Secured Loan, Borrowed Fund C. Both of these D. None of these 11. Bank Overdraft is a Current and ____ Liability. A. Non- Quick B. Quick C. Both of these D. None of These.

LETS TAKE A SMALL TEST. 12. Capital of Rs 80000 will go under _______ A. Applications of Fund. B. Sources of Fund C. Working Capital D. None of these 13. Profit & Loss A/c (Cr. Balance) of Rs 16000 is a ____ A. Capital B. Reserve C. Preliminary Expense D. Application of Fund 14. Marketable Investment of Rs 10000 is a __ and __ Asset. A. Non- Quick and Non- Current B. Non-Quick & Current C. Quick And Non-Current D. Quick And Current.

LETS TAKE A SMALL TEST. 15. Advance Payment of Tax is a ____ and _____ Asset A. Non- Quick and Non- Current B. Non-Quick & Current C. Quick And Non-Current D. Quick And Current 16. Provision for Tax is a ____ and _____ Liability. A. Quick And Current B. Non-Quick & Current C. Non- Quick and Non- Current D. Quick And Non-Current Let us now understand the solution of the sum..

WhatsApp Image 2020-10-22 at 7.31.36 PM.

WhatsApp Image 2020-10-22 at 7.31.36 PM (1).

WhatsApp Image 2020-10-22 at 7.31.36 PM (2).

LETS TAKE ANOTHER SMALL TEST. We have reached the conclusion of the chapter. Now, lets take another small test to understand what all we have learnt. Select the Correct answer out of the choices given below:- 1. In __ Balance Sheet,we can't distinguish between Shareholder's Fund and Borrowed Fund but we can do so in a _ balance sheet. A. Vertical, Horizontal B. Horizontal, Vertical C. Vertical, Vertical D. Horizontal, Horizontal 2. Borrowed Fund= ___+____ A. Secured + Unsecured Loans B. Unsecured + Secured Loans C. Both of these C. None of these.

LETS TAKE ANOTHER SMALL TEST. 3. The assets which are easily convertible into cash are called __. A. Fixed Assets B. Tangible Assets C. Quick Assets D. Non-Quick Assets 4. Working Capital = ____ Assets - ____ Liabilites A. Non-Quick, Non-Quick B. Quick, Quick C. Current, Current D. Non-current, Non- current 5. Working capital is a measure of a company's liquidity, operational efficiency and its short-term financial health. A. True B. False C. Partly True Partly False D. None of the above.

LETS TAKE ANOTHER SMALL TEST. 6. ____ is the fund which is available for distribution with the shareholders A. Applied Fund B. Shareholder's Fund C. Both of these D. None of these 7. Vertical Balance Sheet is a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period. A. True B. False C. Both of these D. None of these.

LETS TAKE ANOTHER SMALL TEST. 8. Profit & Loss A/c(Cr. Balance) is a ____ whereas Profit & Loss A/c(Dr. Balance) is a ____ A. Reserve, Fictitious Assets B. Fictitious Assets, Reserves C. Fictitious Assets, Fictitious Assets D. Reserve, Reserve 9. The investments whose values are realized in more than one accounting year are Non- Current Investments. A. True B. False C. Partly True Partly False D. None of these.

LETS TAKE ANOTHER SMALL TEST. 10. Shareholder's Funds/Net Worth = _________ + ________ - __________ A. Fixed Assets + Investments - Working Capital B. Share Capital + Reserves & Surplus - Fictitious Assets (Preliminary Expenses). C. Shareholder's Fund + Borrowed Fund - Fictitious Assets (Preliminary Expenses). D. None Of These..

SUMMARY. Let us quickly go through whatever we covered in this presentation- First we studied that why is vertical balance sheet prepared. Second, we understood some terms relating to vertical balance sheet. Then, we understood vertical balance sheet through 8 equations. Next, we saw the format of vertical balance sheet. Next, we had a sum and its bifurcations understood through 16 multiple choice questions. Next, we understood its solution. Lastly, we summed up the whole topic with 10 more Multiple Choice Questions..

money-concept-balance-sheet-on-wall-background_gg81496654.

82443022-the-end-comic-speech-bubble-cartoon-vector-illustration-.