AccountancyCBSE Class 12 · Financial Statements of a Company

Balance Sheet of a Company under Schedule III: Class 12 Heads, Sub-heads and Notes

Updated 15 October 2026 · Fact-checked

Under Schedule III of the Companies Act, 2013, a company's Balance Sheet is vertical, in two parts: Equity and Liabilities (shareholders' funds, share application money pending allotment, non-current and current liabilities) and Assets (non-current and current assets), each with fixed sub-heads, a Note No. column, and figures for the current and previous years.

Understand Balance Sheet Format under Schedule III

The vertical format. Columns: Particulars | Note No. | Figures as at the end of the current reporting period | Figures as at the end of the previous reporting period.

I. EQUITY AND LIABILITIES
1. Shareholders' Funds: (a) Share Capital; (b) Reserves and Surplus; (c) Money received against share warrants.
2. Share application money pending allotment.
3. Non-current Liabilities: (a) Long-term borrowings (debentures, long-term loans); (b) Deferred tax liabilities (net); (c) Other long-term liabilities; (d) Long-term provisions (for example, provision for employee benefits payable after 12 months).
4. Current Liabilities: (a) Short-term borrowings (bank overdraft, cash credit, loans repayable on demand); (b) Trade payables (creditors, bills payable); (c) Other current liabilities (current maturities of long-term debt, interest accrued, unpaid or unclaimed dividend, outstanding expenses, advance from customers, calls in advance); (d) Short-term provisions (provision for tax, short-term employee benefits).

II. ASSETS
1. Non-current Assets: (a) Fixed assets, called Property, Plant and Equipment and Intangible assets in the amended Schedule III: (i) tangible assets (PPE: land, buildings, machinery, furniture, vehicles), (ii) intangible assets (goodwill, patents, trademarks, copyrights, software), (iii) capital work-in-progress, (iv) intangible assets under development; (b) Non-current investments; (c) Deferred tax assets (net); (d) Long-term loans and advances; (e) Other non-current assets.
2. Current Assets: (a) Current investments; (b) Inventories (raw materials, work-in-progress, finished goods, stock-in-trade, stores and spares, loose tools); (c) Trade receivables (debtors and bills receivable, net of provision for doubtful debts); (d) Cash and cash equivalents; (e) Short-term loans and advances; (f) Other current assets (prepaid expenses, accrued income).

Notes to accounts that the board asks most.

Share Capital: authorised, issued, subscribed (fully paid; not fully paid, less calls in arrears), add Share Forfeiture.
Reserves and Surplus: capital reserve, securities premium, general reserve, surplus (balance of the Statement of Profit and Loss). A debit balance of the Statement of Profit and Loss is shown here as a negative figure, even if the total becomes negative.
Long-term borrowings: the part of a term loan repayable within 12 months moves to other current liabilities as 'current maturities of long-term debt'.

Check: Total of I = Total of II.

Balance Sheet Format under Schedule III: key facts

Balance sheet equation: Shareholders' funds + share application money pending allotment + non-current liabilities + current liabilities = non-current assets + current assets
Shareholders' funds: Share capital + reserves and surplus + money received against share warrants
Reserves and surplus: Capital reserve + securities premium + general reserve ± balance of Statement of Profit and Loss; A debit balance is subtracted.
Term loan split: 1.Due within 12 months
2.other current liabilities; rest
3.long-term borrowings
Subscribed capital: Shares subscribed × called-up value − calls in arrears + share forfeiture

How to answer Balance Sheet Format under Schedule III questions

Classification MCQs and 'prepare the balance sheet' questions both reduce to placing each item under the right major head and sub-head.

1Decide the side: something owned or receivable (asset) or owed or owners' funds (equity and liabilities).
2Decide current or non-current using the operating cycle and 12-month tests.
3Pick the sub-head from the fixed Schedule III list.
4Prepare notes for share capital, reserves and surplus, and any head with more than one item.
5Show only note totals in the balance sheet, with note numbers.
6Add both parts; they must be equal.

Balance Sheet Format under Schedule III in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

Reading a company balance sheet

Suppose your uncle shows you the annual report of Crestview Paints Ltd (a fictional company) and asks why a bank loan of ₹5,00,000, repayable in five equal yearly instalments from next year, appears in two places in the balance sheet.

Explain where each part is shown and why.

Try it first, then show the solutionSolution

Instalment due within 12 months: 5,00,000 ÷ 5 = ₹1,00,000.
₹1,00,000 under Current Liabilities → Other current liabilities (current maturities of long-term debt).
₹4,00,000 under Non-current Liabilities → Long-term borrowings.

Answer: Schedule III separates what must be paid within the next 12 months from what is due later. So ₹1,00,000 appears as current maturities under other current liabilities and ₹4,00,000 as long-term borrowings, which helps readers judge short-term liquidity.

Memory hook: Due within a year moves up to current.

Tricks to remember Balance Sheet Format under Schedule III

Short memory aids. Say each one aloud once, then use it on a question the same day.

S-S-N-C on the liabilities side
Shareholders' funds, Share application money pending allotment, Non-current, Current.
Use it when: Order of major heads.
BTOS for current liabilities
Borrowings (short-term), Trade payables, Other current liabilities, Short-term provisions.
Use it when: Sub-head order.
In India, Tea and Coffee Sell Often
current Investments, Inventories, Trade receivables, Cash and cash equivalents, Short-term loans and advances, Other current assets.
Use it when: Sub-head order on the assets side.

Balance Sheet Format under Schedule III: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Calls in arrears · 1 mark · MCQBoard level

In the Balance Sheet of a company, calls in arrears are:
(a) shown under Other Current Assets
(b) deducted from subscribed capital in the note on Share Capital
(c) shown under Trade Receivables
(d) added to Reserves and Surplus

Try it first, then show the solutionSolution

Calls in arrears reduce the paid-up value of subscribed capital; they are deducted in the Share Capital note.

Answer: (b) deducted from subscribed capital in the note on Share Capital

Example 2: Classify six items · 3 marks · Short answerBoard level

Under which major head and sub-head will these appear in a company's Balance Sheet: (i) Loose tools; (ii) Bank overdraft; (iii) Provision for employee benefits payable after 18 months; (iv) Goodwill; (v) Unpaid dividend; (vi) Shares of another company held for trading? (3 marks)

Try it first, then show the solutionSolution

(i) Current Assets → Inventories. (ii) Current Liabilities → Short-term borrowings.
(iii) Non-current Liabilities → Long-term provisions. (iv) Non-current Assets → Intangible assets.
(v) Current Liabilities → Other current liabilities. (vi) Current Assets → Current investments.

Answer: As listed: (i) Inventories; (ii) Short-term borrowings; (iii) Long-term provisions; (iv) Intangible assets; (v) Other current liabilities; (vi) Current investments.

Example 3: Reserves and Surplus with a debit balance · 3 marks · Short answerHarder board level

A company's equity share capital is ₹10,00,000. Securities Premium is ₹1,00,000, General Reserve ₹2,00,000, and the Statement of Profit and Loss shows a debit balance of ₹50,000. Prepare the note on Reserves and Surplus and show Shareholders' Funds. (3 marks)

Try it first, then show the solutionSolution

Reserves and Surplus: Securities Premium 1,00,000 + General Reserve 2,00,000 + Surplus (−50,000).
Total = ₹2,50,000.
Shareholders' Funds = 10,00,000 + 2,50,000 = ₹12,50,000.

Answer: Reserves and Surplus ₹2,50,000 (debit balance shown as −50,000); Shareholders' Funds ₹12,50,000.

Example 4: Term loan with current maturities · 3 marks · Short answerHarder board level

On 31st March 2026, a company has a 10% bank loan of ₹8,00,000, repayable in four equal annual instalments starting 31st March 2027. Interest of ₹80,000 for the year is accrued and due but not paid. Show these items in the Balance Sheet. (3 marks)

Try it first, then show the solutionSolution

Instalment due within 12 months = 8,00,000 ÷ 4 = ₹2,00,000 → Other current liabilities (current maturities of long-term debt).
Balance ₹6,00,000 → Long-term borrowings.
Interest accrued and due ₹80,000 → Other current liabilities.

Answer: Long-term borrowings ₹6,00,000; Other current liabilities ₹2,80,000 (current maturities 2,00,000 + interest accrued and due 80,000).

Example 5: Prepare the Balance Sheet · 6 marks · Long answerHOTS / competency

From the following balances of Pinewood Ltd as at 31st March 2026, prepare its Balance Sheet as per Schedule III with notes: Equity share capital ₹8,00,000; General Reserve ₹1,20,000; Surplus (Statement of Profit and Loss) ₹80,000; 9% Debentures ₹3,00,000; Trade payables ₹1,40,000; Provision for tax ₹40,000; Outstanding expenses ₹20,000; Property, plant and equipment (net) ₹7,00,000; Goodwill ₹1,00,000; Non-current investments ₹1,50,000; Inventories ₹1,60,000; Trade receivables ₹1,30,000; Cash and cash equivalents ₹2,50,000; Prepaid expenses ₹10,000. (6 marks)

Try it first, then show the solutionSolution

Shareholders' Funds: Share Capital 8,00,000; Reserves and Surplus (note: 1,20,000 + 80,000) 2,00,000.
Non-current Liabilities: Long-term borrowings (9% Debentures) 3,00,000.
Current Liabilities: Trade payables 1,40,000; Other current liabilities 20,000; Short-term provisions 40,000. Total I = 15,00,000.
Non-current Assets: PPE 7,00,000; Intangible assets 1,00,000; Non-current investments 1,50,000.
Current Assets: Inventories 1,60,000; Trade receivables 1,30,000; Cash and cash equivalents 2,50,000; Other current assets 10,000. Total II = 15,00,000.

Answer: Both totals are ₹15,00,000. Notes: Reserves and Surplus 2,00,000; Fixed assets (PPE 7,00,000 + Intangibles 1,00,000) 8,00,000.

Example 6: Debit balance of profit and loss · 1 mark · Assertion-reasonHOTS / competency

Assertion (A): A debit balance of the Statement of Profit and Loss is shown on the assets side of a company's Balance Sheet.
Reason (R): Under Schedule III, it is shown as a negative figure under Reserves and Surplus.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.

Try it first, then show the solutionSolution

A loss is not an asset; Schedule III reduces Reserves and Surplus with it.

Answer: (d) A is false, but R is true.

Where students lose marks in Balance Sheet Format under Schedule III

The slips examiners see most often, and what to write instead.

Mistake: Showing a debit balance of profit and loss as an asset
Old partnership habit.
Wrong working
Other non-current assets: Profit and Loss (Dr) 50,000.
Right working
Reserves and Surplus: Surplus (−50,000).
Do this: Losses reduce shareholders' funds.
Usually costs: 1 mark.
Mistake: Putting the whole term loan under long-term borrowings
Ignoring the 12-month rule.
Wrong working
Long-term borrowings 8,00,000.
Right working
6,00,000 long-term; 2,00,000 current maturities.
Do this: Split by due date.
Usually costs: 1 mark.
Mistake: Showing loose tools or stores under fixed assets
They sound like equipment.
Wrong working
PPE: Loose tools 15,000.
Right working
Inventories: Loose tools 15,000.
Do this: Schedule III lists them under inventories.
Usually costs: 1 mark.
Mistake: Giving only the major head
Not knowing that sub-heads are required.
Wrong working
Bank overdraft → Current Liabilities.
Right working
Current Liabilities → Short-term borrowings.
Do this: Always write major head and sub-head.
Usually costs: 1/2 mark per item.

Exam tips

In classification questions, write 'Major head → Sub-head' for each item.
Number your notes and show only note totals in the balance sheet.
Keep the previous-year column even if figures are not given (write '—').
Questions here are 1-mark MCQs and 3- or 4-mark classification or note questions in Part B Option I.

Practice questions on Balance Sheet Format under Schedule III

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
Trade payables are shown under:
(a) Non-current liabilities
(b) Current liabilities
(c) Shareholders' funds
(d) Current assets
Hint
Creditors and bills payable.
Answer
(b) Current liabilities
Q2 · 1 mark · MCQBoard level
Capital work-in-progress is shown under:
(a) Inventories
(b) Other current assets
(c) Non-current assets → Fixed assets (PPE and intangible assets)
(d) Non-current investments
Hint
An asset being built for long-term use.
Answer
(c) Non-current assets → Fixed assets (PPE and intangible assets)
Q3 · 3 marks · Short answerBoard level
Show the major head and sub-head for: (i) Securities Premium; (ii) Bills payable; (iii) Patents; (iv) Stores and spares; (v) Unclaimed dividend; (vi) Mining rights. (3 marks)
Hint
Two items each from equity, liabilities and assets.
Answer
(i) Shareholders' Funds → Reserves and Surplus; (ii) Current Liabilities → Trade payables; (iii) Non-current Assets → Intangible assets; (iv) Current Assets → Inventories; (v) Current Liabilities → Other current liabilities; (vi) Non-current Assets → Intangible assets.
Q4 · 3 marks · Short answerHarder board level
A company issued 50,000 equity shares of ₹10 each, fully called. Calls in arrears are ₹5,000. Show the subscribed capital in the Share Capital note. (3 marks)
Hint
Subscribed but not fully paid.
Answer
Subscribed but not fully paid: 50,000 equity shares of ₹10 each = 5,00,000; Less: Calls in arrears 5,000; = ₹4,95,000.
Q5 · 3 marks · Short answerHarder board level
Capital Reserve ₹30,000, Securities Premium ₹50,000 and a debit balance of the Statement of Profit and Loss of ₹1,20,000. Prepare the note on Reserves and Surplus. (3 marks)
Hint
The total may be negative.
Answer
Capital Reserve 30,000; Securities Premium 50,000; Surplus (−1,20,000). Total Reserves and Surplus = (−)₹40,000, shown as a negative figure.
Q6 · 3 marks · Short answerHarder board level
Where will these appear: (i) Advance received from customers; (ii) Interest accrued on investments; (iii) Loan to an employee repayable in 6 months? (3 marks)
Hint
Two current items and one liability.
Answer
(i) Current Liabilities → Other current liabilities; (ii) Current Assets → Other current assets; (iii) Current Assets → Short-term loans and advances.
Q7 · 3 marks · Short answerHarder board level
A 12% loan of ₹6,00,000 is repayable at ₹1,50,000 per year, the next instalment falling due in 9 months. Interest of ₹18,000 is accrued and due. Show the items in the Balance Sheet. (3 marks)
Hint
Split the loan.
Answer
Long-term borrowings ₹4,50,000. Other current liabilities ₹1,68,000 (current maturities 1,50,000 + interest accrued and due 18,000).
Q8 · 1 mark · Assertion-reasonHarder board level
Assertion (A): Loose tools are shown under Property, Plant and Equipment.
Reason (R): Schedule III includes loose tools under Inventories.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.
Hint
Check the inventory list.
Answer
(d) A is false, but R is true.
Q9 · 3 marks · Short answerHOTS / competency
A company's Balance Sheet total is ₹20,00,000. Non-current assets are ₹12,00,000; inventories ₹3,00,000; trade receivables ₹2,50,000; cash and cash equivalents ₹1,00,000. The only other asset is 'other current assets'. Find it. (3 marks)
Hint
Total assets = total of the balance sheet.
Answer
Other current assets = 20,00,000 − 12,00,000 − (3,00,000 + 2,50,000 + 1,00,000) = ₹1,50,000.
Q10 · 3 marks · Short answerHOTS / competency
A student showed 'Provision for doubtful debts ₹8,000' under Short-term provisions and 'Provision for tax ₹40,000' under Long-term provisions. Correct both and give reasons. (3 marks)
Hint
One is a valuation provision; one is payable soon.
Answer
Provision for doubtful debts is not a liability but a reduction in the value of debtors, so it is deducted from Trade receivables. Provision for tax is payable within 12 months, so it belongs under Current Liabilities → Short-term provisions.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.Name the four sub-heads of current liabilities.Show answer
Short-term borrowings, trade payables, other current liabilities, short-term provisions.
2.Where are debentures shown?Show answer
Non-current liabilities → Long-term borrowings.
3.Where is unpaid dividend shown?Show answer
Current liabilities → Other current liabilities.
4.Where is goodwill shown?Show answer
Non-current assets → Intangible assets.
5.How is a debit balance of the Statement of Profit and Loss shown?Show answer
As a negative figure under Reserves and Surplus.

Balance Sheet Format under Schedule III: frequently asked questions

What is the Schedule III Balance Sheet format in Class 12?

A vertical statement with two parts, Equity and Liabilities and Assets, each with prescribed major heads and sub-heads, a Note No. column and current and previous year figures.

Is 'fixed assets' or 'property, plant and equipment' correct?

NCERT uses fixed assets with tangible and intangible assets; the amended Schedule III uses Property, Plant and Equipment and Intangible assets. Either is accepted if the sub-items are right.

Where is share forfeiture shown?

In the Share Capital note, added to subscribed capital.

Are exceptional and extraordinary items in the syllabus?

No. They and discontinued operations are excluded in 2026-27.