CA Inter Adv Accounting — Mock Test Paper (MTP) — May 2020

Note: The specific ledger balances and additional information (asset costs, receivables classification, bank balances, loan terms, and other adjustments) were not included in the question as presented. The solution below demonstrates the complete Schedule III framework and classification rules applicable to SR Ltd.'s Balance Sheet as on 31st March, 2020, which a student must apply to the actual figures provided in the exam paper.

Legal Framework: The Balance Sheet must be prepared as per Part I of Schedule III to the Companies Act, 2013, which prescribes the format for companies other than those required to comply with Ind AS (unless SR Ltd. is a Phase II/III company). The Balance Sheet follows the Vertical Format with two main heads: Equity & Liabilities and Assets.

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SR LTD.
Balance Sheet as at 31st March, 2020
*(₹ in ___)*

I. EQUITY AND LIABILITIES

1. Shareholders' Funds
(a) Share Capital — Disclosed at face value; calls in arrears deducted; calls in advance shown separately under Current Liabilities.
(b) Reserves & Surplus — Securities Premium, General Reserve, Surplus (Closing balance of P&L), Capital Reserve etc. shown separately. Debit balance of P&L shown as negative.

2. Non-Current Liabilities
(a) Long-Term Borrowings — Loans repayable after 12 months from Balance Sheet date; secured/unsecured nature and nature of security disclosed in notes.
(b) Deferred Tax Liabilities (Net) — if applicable.
(c) Long-Term Provisions — Provision for employee benefits (gratuity, leave encashment) payable beyond 12 months.

3. Current Liabilities
(a) Short-Term Borrowings — Bank overdraft, cash credit, loans repayable within 12 months.
(b) Trade Payables — Separately disclose: (i) dues to Micro & Small Enterprises, (ii) dues to others.
(c) Other Current Liabilities — Current maturities of long-term debt, interest accrued, calls in advance, advance from customers, statutory dues (TDS payable, GST payable, PF/ESI).
(d) Short-Term Provisions — Proposed dividend, provision for tax (net of advance tax if applicable).

II. ASSETS

1. Non-Current Assets
(a) Property, Plant & Equipment (PPE) — Shown at Gross Block less Accumulated Depreciation = Net Block in a tabular note. Capital WIP shown separately.
(b) Intangible Assets — Goodwill, trademarks, patents at cost less amortisation.
(c) Non-Current Investments — Long-term investments at cost; provision for diminution if any.
(d) Long-Term Loans & Advances — Security deposits, advance tax (net of provision, if excess), capital advances.
(e) Other Non-Current Assets — Preliminary/fictitious assets being written off (to be fully written off as per prudence).

2. Current Assets
(a) Inventories — Raw materials, WIP, finished goods, stores & spares, loose tools — at cost or NRV, whichever lower.
(b) Trade Receivables — Debtors outstanding >6 months and ≤6 months shown separately in notes. Further classified as secured/unsecured and provision for doubtful debts deducted.
(c) Cash & Cash Equivalents — Cash in hand, cheques/drafts in hand, balance with banks in current accounts, short-term deposits (original maturity ≤3 months).
(d) Short-Term Loans & Advances — Prepaid expenses, advance to suppliers, balance with government authorities.
(e) Other Current Assets — Accrued income, interest receivable.

Key Classification Rules Applied:

Assets: An asset is Non-Current if: (i) held for use in production/supply of goods/services or for administrative purposes; or (ii) held for investment; or (iii) expected to be realised after 12 months; or (iv) not held for sale. All other assets are Current.

Liabilities: A liability is Current if: (i) expected to be settled within 12 months; or (ii) held primarily for trading; or (iii) due within normal operating cycle. Current portion of long-term borrowings (i.e., instalment/repayment due within 12 months) must be reclassified to Current Liabilities under 'Other Current Liabilities — Current Maturities of Long-Term Debt'.

Bank Balances: Balances with banks in current accounts → Cash & Cash Equivalents. Fixed deposits with original maturity >3 months but ≤12 months → Other Bank Balances (Current). Fixed deposits with maturity >12 months → Other Non-Current Assets.

Contingent Liabilities & Commitments are disclosed in Notes to Accounts only — NOT in the Balance Sheet body (per Schedule III para 5).

Depreciation on Fixed Assets: If additional information provides cost and rate, compute: Depreciation = Cost × Rate (WDV or SLM as stated). Net Block = Gross Block − Accumulated Depreciation (opening accumulated dep. + current year dep.).

Provision for Doubtful Debts: Deducted from Trade Receivables in notes; net figure shown on face of Balance Sheet.

The Balance Sheet must balance: Total Equity & Liabilities = Total Assets.

Students must apply the above framework to the specific figures in the question to complete SR Ltd.'s Balance Sheet. Every line item must be supported by a Note to Accounts numbered sequentially.