Hi Friends, I am preparing for CA exam. May I know, Where we show the brought forwarded losses in the Balance Sheet?
Hi, Brought forward loss is shown as adjustments under Capital Account and is shown Liability side of Balance Sheet. Thanks
Brought forward loss is shown as adjustments under Capital Account and is shown Liability side of Balance Sheet.
--It shown under the head of reserve and surplus in the liability side of the Balance Sheet.
In this article we will also discuss: • Balance Sheet • Trading and Profit and Loss Account • Adjustments of Final Accounts While introducing the subject of accounting to the readers (In Chapter I) it was stated that one of the main objectives of financial accounting is to provide information about the profits earned or loss suffered by the business during a particular period. Previously while discussing the basic accounting equation it was noted that A - L = P, where A represents assets (property and possession) owned by the business; L represents liabilities (claims against the business of the creditors) and P represents the proprietor's funds (equity) in the business., Accounting Concept of Income The concept of 'income' is different to the economists and accountants. Economists concept of income is that of 'real income' meaning thereby the increase-in real terms of the ownership funds between two points of time. In accounting the term income is known as 'net profit'. It was stated earlier : Sales - Merchandising cost = Gross profit and Gross profit - Expenses of doing business = Net profit In other words, Revenue - Expenses = Net profit. These terms are explained below: Revenue It is the monetary value of the products sold or services rendered to the customers during the period. It results from sales services and source like interest, dividend and commission etc. For example, sales affected by the business and charge made for services rendered by the business constitutes revenue. However, all cash receipt may nott be revenue. Thus, money borrowed leads to cash receipt but it does not constitute revenue. Similarly additional capital brought in increases proprietor's funds but it is not revenue. Expenses/Cost of (doing business) Expenditure incurred by the business to earn revenue is termed as expense or cost of doing business. Examples of expenses are raw materials consumed, salaries, rent, depreciation, advertisement etc. Cash v/s Accrual Basis of Accounting Small business, individual professionals and non-trading concerns usually adopt cash basis of accounting. Under this system, incomes are considered to have been earned only when received ill cash and expenses are considered to have been incurred only actually paid. Hence, under this system the profit or loss of an accounting period is the difference between incomes received and the expenses paid. Though the cash basis of accounting is simple (no adjustment is required) but il loses its comparability.
Dear Friend, as far as your query is concerned that Where we show the brought forwarded losses in the Balance Sheet? Let me informed that Brought forward loss is shown as adjustments under Capital Account and is shown Liability side of Balance Sheet. Hope answer was helpful to you Regards, Arjun Pratap Singh