Banking Assignment: Prof. Eknath Barari

BANKING ASSIGNMENT
PROF. EKNATH BARARI
7/15/2016
TOPIC- HOW BALANCE SHEET OF THE BANKS DIFFER FROM THE NORMAL
TRADING AND MANUFACTURING COMPANIES BALANCE SHEET ?
NAME:
Parth Amberkar-68
Sonam Gokani-78
Manish Yabaluri-88
Prachi Bang-98
Ritika Punwani-108
Rachna Mandlik-118
TRADING AND MANUFACTURING BALANCE
SHEET
Introduction: The balance sheet is a statement of the financial position of a business at
a given date. It is, therefore, only a "snapshot" in time. When comparing business
performance, therefore, a number of years and time periods may be more suitable. The
balance sheet is the equation but set out in a vertical form in order to be more readily,
understood i.e. the accounting equation.
Assets - Liabilities = Capital + Profit - Drawings
As with trading and profit and loss, the balance sheet has its own nomenclature. These
are fixed accounts, current accounts, current liabilities and funds:
A) Fixed assets: assets acquired for use within the business with a view to earning
profits, but not for resale. They are normally valued at cost less accumulated
depreciation.
B) Current assets: assets acquired for conversion into cash in the ordinary course of
business; they should not be valued at a figure greater than their net realisable value.
C) Current liabilities: amounts owed by the business, payable within one year.
D) Net current assets: funds of the business available for day-to-day transactions. This
can also be called working capital.
E) Loans: Funds provided for the business on a medium to long term basis by an
individual or organisation other than the proprietor.
F) This total is the total of the business's net assets.
G) This total is the total of proprietor's funds, i.e. the extent of his investment in the
business. Within these main headings the following items should be noted.
Fixed assets
Depreciation is an amount charged in the accounts to write off the cost of an asset over
its useful life.
Current assets
Debtors are people who owe amounts to the business.

Prepayments are items paid before the balance sheet date but relating to a subsequent
period.
Current liabilities
Trade creditors are those suppliers to whom the business owes money.
Accrued charges are amounts owed by the business, but not yet paid, for other
expenses at the date of the balance sheet.
Components of Bank balance sheet:
Liabilities Assets
1. Capital 1.Cash and balances with RBI
2. Reserves and Surplus 2.Balance with banks and money at
call and short notice
3. Deposits 3.Investments
4. Borrowings 4.Advances
5. Other Liabilities 5.Fixed Assets
6.Other Assets
Bank Balance Sheet
The Balance Sheet of a Bank reflects its financial health. Liabilities shows the
sources of funds raised, Assets accounts for the applications of the funds and net
worth is the owners fund at a particular date, usually at the end of the financial
year.
Balance Sheet of a bank is prepared according to the Banking Regulation Act,

1949 in which Schedules are prepared for its clear understanding. It is mainly
divided into two broad heads (1) Capital and Liabilities (2) Assets whose amount
must be same
Total Share Capital The capital of the company in the form of shares is
known as share capital. It comprises of both equity and preferred capital.
Reserves A percentage of profit is transferred to reserves every year, to
meet out future contingencies.
Deposits Amount deposited by the customers in the bank, such as

saving deposits, fixed deposits, recurring deposit.
Borrowings Amount borrowed by bank from any bank or financial

institution.
Other Liabilities & Provisions Financial obligation to be discharged by

the bank.
Cash & Balance with RBI Amount of money maintained with the
Reserve Bank of India.
Balance with Bank, Money at call and short notice Funds maintained
with any commercial bank, which are for a very short period.
Investment Money invested by the bank as an investment within and

outside India.
Advances Money lent in the form of the loan, such as cash credit, bill
discounted and overdraft.
Other Asset It comprises of the accrued income, advance tax paid and
miscellaneous income.
Analyzing a Balance Sheet

Analysts review an organization's balance sheet to assess its liquidity, defined as its
ability to meet its short-term financial obligations, and its solvency, defined as the
entity's ability to endure for the long term. Analysts compare the organization's current
assets to current liabilities; ideally, a small business's current assets equal at least twice
the value of its current liabilities. To assess an entity's solvency, analysts compare total
debt to owners' equity. The measure of solvency varies from business to business.
Notably, a bank primarily finances its operations with debt, while a service company
such as law firm or accounting firm primarily finances its operations with owner equity.
Key Differences Between Company

Balance Sheet and Bank Balance Sheet
1) Balance Sheet of a Company, is prepared according to Schedule III of

the Indian Companies Act, 2013. Balance Sheet of a Bank is prepared
according to the Indian Banking Regulation Act, 1949.
2) Notes to Account are made in the Company Balance Sheet. Schedules

are made in the Bank Balance Sheet.
Balance Sheet of a Bank (Format)

Balance sheet of a Trading Company
(Format)
Conclusion
Balance Sheet of a company is an important tool for the financial analysis

of any concern. It shows the financial status of any company at a particular
date. It helps the stakeholders to know about its liquidity, solvency, and
performance. Besides this, the comparison can also be made in the past
and present performance of the entity.

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BANKING ASSIGNMENT

PROF. EKNATH BARARI

Assets - Liabilities = Capital + Profit - Drawings

F) This total is the total of the business's net assets.

Debtors are people who owe amounts to the business.

Components of Bank balance sheet:

Bank Balance Sheet

Balance Sheet of a bank is prepared according to the Banking Regulation Act,

Deposits Amount deposited by the customers in the bank, such as

Borrowings Amount borrowed by bank from any bank or financial

Other Liabilities & Provisions Financial obligation to be discharged by

Investment Money invested by the bank as an investment within and

Analyzing a Balance Sheet

Key Differences Between Company

1) Balance Sheet of a Company, is prepared according to Schedule III of

2) Notes to Account are made in the Company Balance Sheet. Schedules

Balance Sheet of a Bank (Format)

Balance Sheet of a company is an important tool for the financial analysis

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