Balance sheet format

What the balance sheet tells you

The profit and loss account shows how the year went. The balance sheet shows where the business stands at the end of it: how much capital the owner has in it, how much is borrowed, how much is stuck with debtors and in stock, and how much cash is in hand. Banks read it before giving a cash credit limit, and suppliers ask for it before giving large credit.

For a short walk through each head, see how to read a balance sheet.

Sample balance sheet format

Figures are made up but add up. Download CSV opens in Excel or Google Sheets as a starting template; Print blank template gives the same layout with the amounts left empty.

What to put on it

• Business name and 'Balance Sheet as at' date
• Capital account (opening, profit, drawings, closing)
• Long-term loans
• Current liabilities: creditors, bank borrowing, duties payable
• Provisions and expenses payable
• Fixed assets net of depreciation
• Investments and deposits
• Closing stock
• Sundry debtors
• Cash and bank balances
• Loans and advances
• Totals on both sides that agree
• Previous year figures (for companies)
• Signature of proprietor/partners or directors

Which format applies to you

• Companies must follow Schedule III of the Companies Act, 2013, in the vertical form with notes, previous-year figures and the heads it prescribes.
• Proprietors and partnership firms have no prescribed layout. Many still use the traditional horizontal or T format (liabilities on the left, assets on the right); others use a simple vertical format like the one below. Partnership firms usually show each partner's capital account.
• LLPs follow the formats prescribed under the LLP rules.

Whatever the layout, the heads below appear in almost every small business balance sheet.

Worked example: a trading firm

Gupta Distributors, a proprietorship, as at 31 March 2027:

Two quick readings: working capital (stock + debtors + cash − creditors − short-term dues) is about ₹28 lakh, much of it funded by the bank. And debtors of ₹17.3 lakh are worth checking against an ageing report to see how much is truly collectable.

The main heads explained

Capital and liabilities

• Capital: owner's or partners' money in the business, plus profits kept, less drawings.
• Long-term loans: term loans and unsecured loans repayable after a year.
• Current liabilities: creditors, short-term bank borrowing, GST and TDS payable, expenses due.

Assets

• Fixed assets: land, building, machinery, vehicles, computers, shown after depreciation.
• Investments and long-term deposits.
• Current assets: stock, debtors, cash and bank, advances, GST input credit balance.

Checks before you trust the figures

• Bank balance agrees with the bank statement after reconciliation.
• Closing stock is counted or verified, not carried from last year.
• Debtors and creditors agree with party confirmations, at least for large ones.
• GST payable matches the returns filed and the electronic ledgers.
• The trial balance tallies; see trial balance explained.

Ratios worth working out

Three simple ratios make a balance sheet useful. Current ratio (current assets divided by current liabilities) shows whether short-term dues can be met; many lenders like it well above 1. Debtor days (debtors divided by credit sales, times 365) shows how long customers take to pay. Stock days (closing stock divided by cost of goods sold, times 365) shows how long goods sit before selling. Track them each year; the trend matters more than any single figure.

Getting it from Tally

TallyPrime builds the balance sheet from the groups your ledgers sit in: Capital Account, Loans (Liability), Current Liabilities, Fixed Assets, Current Assets and so on. If a ledger is put under the wrong group, it shows in the wrong place on the balance sheet, so check the grouping once a year. The template on this page follows the same main heads.