Financial Statements - I

as increased by profits and interest on capital and decreased by losses drawings and intrest on drawings. ( ) Drawings : Amount withdrawn by the proprietor is termed as drawings and has the effect of reducing the balance on his capital account. Therefore, the drawings account is closed by transferring its balance to his capital account. However it is shown by way of deduction from capital in the balance sheet.

. . Marshalling and Grouping of Assets and Liabilities A major concern of accounting is about preparing and presenting the financial statement. The information so provided should be decision useful for the users.

Therefore, it becomes necessary that the items appearing in the balance sheet should be properly grouped and presented in a particular order. In a balance sheet, the assets and liabilities are arranged either in the order of liquidity or permanence . Arrangement of assets and liabilities in a particular order is known as Marshalling. In case of permanence , the most permanent asset or liability is put on the top in the balance sheet and thereafter the assets are arranged in their reducing level of permanence.

In the balance sheet of Ankit you will find that furniture is the most