Introduction to Balance Sheet
A Balance Sheet is a financial statement that shows the financial position of a business at a particular point in time. It reflects what the business owns (assets) and owes (liabilities), along with the owner’s equity (capital).
Purpose of a Balance Sheet in Accounting
The primary purpose of a balance sheet is to:
- Show the financial health of a company.
- Help stakeholders like owners, investors, and auditors understand the position of the business.
- Facilitate decision-making by providing key insights into business performance.
Importance of Balance Sheet in Tally Prime
Tally Prime, a leading accounting software, automatically generates the balance sheet based on recorded transactions. It is:
- Real-time, always up-to-date.
- Accurate, as it's auto-generated from ledgers and vouchers.
- Dynamic, as you can drill down to each figure.
Components of a Balance Sheet
- A balance sheet is divided into two major sections:
- Assets (What the business owns)
- Liabilities and Capital (What the business owes and owner's stake)
Assets – Types and Examples
Fixed Assets:
- Land & Building, Machinery, Computers, Furniture
- Tally Group: Fixed Assets
- Cash in hand, Bank, Stock, Debtors
- Tally Groups: Bank Accounts, Stock-in-Hand, Sundry Debtors
Liabilities – Types and Examples
- Long-term Liabilities:
- Loans taken for more than 1 year
- Tally Group: Secured Loans
Current Liabilities:
- Outstanding expenses, Sundry Creditors
- Tally Group: Sundry Creditors, Duties & Taxes
Capital and Reserves
- Capital Introduced by owner
- Reserves & Surplus from profits
- Tally Groups: Capital Account, Reserves & Surplus
How Tally Prime Generates a Balance Sheet
- Tally Prime calculates the balance sheet using:
- All ledger balances
- Closing stock value
- Capital introduced
- Profit/loss transferred to Capital
Pre-defined Balance Sheet in Tally
- Tally Prime provides a pre-configured Balance Sheet report under:
- Gateway of Tally → Display More Reports → Final Accounts → Balance Sheet
Features of Balance Sheet in Tally Prime
- Real-time update
- Drill-down capability
- Export options
- Vertical/horizontal view
- Comparison with previous periods
How to View Balance Sheet in Tally Prime
Step-by-step:
- Open Tally Prime
- Go to Gateway of Tally
- Select Display More Reports
- Choose Final Accounts
- Click on Balance Sheet
Steps to Open the Balance Sheet
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Gateway of Tally → Display More Reports → Final Accounts → Balance Sheet
Use shortcut key: Alt + G > Type "Balance Sheet"
Configuration Options in Balance Sheet
- You can configure the view using F12: Configure to:
- Show net profit/loss
- Show percentage column
- Show working capital
- Include or exclude groups
Groupings in Balance Sheet
- Balance sheet groups are predefined in Tally under:
- Primary (e.g., Capital, Current Assets)
- Sub-groups (e.g., Sundry Debtors, Bank Accounts)
- Proper ledger classification is important for accurate balance sheet reporting.
Horizontal and Vertical Format
You can switch between:
- Vertical Format: Assets below liabilities
- Horizontal Format: Assets on one side, liabilities on the other
- Shortcut: Use Alt + F1 to toggle formats.
Understanding the Figures in Balance Sheet
Each figure shown in the balance sheet is derived from:
- Ledger entries
- Stock values (manual or calculated)
- Profit or loss for the year
- Use Enter key to drill down for details.
Adjustments in Balance Sheet
Adjustments can include:
- Closing stock adjustments
- Capital withdrawals/additions
- Adjusting provisions or reserves
Example of a Balance Sheet in Tally Prime
Let’s consider an example:
Example:
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Assets:
Fixed Assets ₹2,00,000
Stock in Hand ₹1,50,000
Cash in Bank ₹50,000
Sundry Debtors ₹1,00,000
Total Assets ₹5,00,000
Liabilities:
Sundry Creditors ₹1,00,000
Loans Taken ₹1,00,000
Capital Account ₹3,00,000
Total Liabilities + Capital ₹5,00,000
Here, the balance sheet is in equilibrium:
Total Assets = Total Liabilities + Capital
Exporting Balance Sheet to PDF or Excel
You can export the balance sheet by pressing:
- Alt + E → Export → Choose Format (PDF, Excel)
- Select location and export
Difference Between Balance Sheet and Trial Balance
| Trial Balance | Balance Sheet |
|---|---|
| Shows debit & credit | Shows assets & liabilities |
| Temporary statement | Final report |
| Not submitted to authorities | Required for tax/audit |
Customizing Balance Sheet View
Tally allows you to:
- Hide/show groups
- Display percentages
- Compare with other periods
- Rearrange using F12 configurations
Common Mistakes to Avoid
- Misclassification of ledgers
- Not updating closing stock
- Ignoring capital drawings
- Skipping adjustments
Tips for Accurate Balance Sheet Reporting
- Update all transactions till date
- Classify ledgers correctly
- Reconcile bank and stock
- Use Verify Books tool in Tally
Role of Balance Sheet in Audit and Compliance
- Helps assess financial health
- Required for tax filing and GST audit
- Basis for loan approval
- Useful during partnership or ownership change
Conclusion
The Balance Sheet in Tally Prime is a vital financial report that helps understand a business’s financial standing. With automated features and dynamic reports, Tally Prime simplifies the process of balance sheet creation, making it easier for accountants and business owners to make informed decisions.
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