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Presented by:

Dipankar Saikia (Roll No. 33)

Raktim Nath (Roll No. 22)

The accounting balance sheet is one of the major financial statements
used by accountants and business owners. The balance sheet is also
referred to as the statement of financial position.
The balance sheet presents a company's financial position at the end of
a specified date. Some describe the balance sheet as a "snapshot" of
the company's financial position at a point (a moment or an instant) in
time. For example, the amounts reported on a balance sheet dated
December 31, 2015 reflect that instant when all the transactions
through December 31 have been recorded.

The format of the balance sheet is not mandated by accounting

standards, but rather by customary usage. The two most common
formats are the vertical balance sheet (where all line items are
presented down the left side of the page) and the horizontal balance
sheet (where asset line items are listed down the first column and
liabilities and equity line items are listed in a later column). The vertical
format is easier to use when information is being presented for multiple
The line items to be included in the balance sheet are up to the issuing
entity, though common practice typically includes some or all of the
following items:
Current Assets
Non-Current Assets


The preparation of Balance sheet gives following advantages:
It is helpful in ascertaining the financial position of the business by
showing assets and liabilities of the concern on a specific date.
It discloses the solvency of business by showing how much assets are
available for payment of liabilities.
It also disclose the proprietary interest of owner.
It helps in calculation of various ratios which help in better
management of business.
It helps in comparison of assets and liabilities of business on two dates
to ascertain the progress being made by business.
It helps to ascertain the amount of capital employed in business.


True and fair view in auditing means that the financial statements are
free from material misstatements and faithfully represent the financial
performance and position of the entity.
True and fair is not something that is merely a separate add-on to
accounting standards.

Rather the whole essence of standards is to

provide for recognition, measurement, presentation and disclosure for

specific aspects of financial reporting in a way that reflects economic
reality and hence that provides a true and fair view.

Although the expression of true and fair view is not strictly defined in
the accounting literature, we may derive the following general
conclusions as to its meaning:
True suggests that the financial statements are factually correct and
have been prepared according to applicable reporting framework such
as the IFRS and they do not contain any material misstatements that
may mislead the users. Misstatements may result from material errors
or omissions of transactions & balances in the financial statements.
Fair implies that the financial statements present the information
faithfully without any element of bias and they reflect the economic
substance of transactions rather than just their legal form.


In the majority of cases a true and fair view would be achieved by
compliance with the accounting standards as the standards are
designed to provide for recognition, measurement, presentation and
disclosure for specific aspects of financial reporting in a way that
reflects economic reality.
The FRCs statement, however, clarifies that, where directors and
auditors do not believe that following a particular accounting policy will
give a true and fair view, they are legally required to adopt a more
appropriate policy, even if this requires a departure from a particular
standard. Disagreement with a particular standard does not, on its own,
provide grounds for departure from it.


Preparation of true and fair financial statements has been expressly
recognized as one of the responsibilities of the directors of companies
in the corporate law of several countries. Auditors must therefore
consider whether directors have fulfilled their responsibility for the
preparation of true and fair financial statements when providing an
audit opinion.
Company law of certain jurisdictions require the auditors to expressly
state in their audit report whether in their opinion the financial
statements present a true and fair view of the financial performance
and position of the entity.

The statement highlights what is expected by the FRC as a result of the
clarifications outlined in respect of the true and fair requirement:
to always stand back and ensure that the accounts as a whole do give
a true and fair view;
to provide additional disclosures when compliance with an accounting
standard is insufficient to present a true and fair view;
to use the true and fair override where compliance with the standards
does not result in the presentation of a true and fair view; and
to ensure that the consideration they give to these matters is evident
in their deliberations and documentation.

Thank You