Balance Sheet: structure and reading it
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Updated 29 Sep 2026
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AI summary
What each section of the Balance Sheet means and what to check.
3 sections
Structure (Schedule III style)
| Equity and liabilities | Assets |
|---|---|
| Shareholders' funds: share capital / owner's capital, reserves and surplus | Non-current assets: property, plant and equipment, intangibles, capital work-in-progress, long-term investments, long-term loans and deposits |
| Non-current liabilities: long-term borrowings, long-term provisions | Current assets: inventories, trade receivables, cash and bank, short-term loans and advances, other current assets |
| Current liabilities: short-term borrowings, trade payables, other current liabilities (GST/TDS payable, advances from customers), short-term provisions |
Total equity and liabilities = total assets.
What to check
- Current ratio (current assets ÷ current liabilities) above about 1.2 for most trading businesses.
- Debtors and stock growing faster than sales → cash getting stuck.
- Negative cash or bank balances → missing entries or overdraft.
- Suspense or "difference in opening balance" → must be cleared.
In Hisab Central
Final Accounts → Balance Sheet. Ledgers appear according to their group, so a ledger in the wrong group appears in the wrong place.
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