Main Terms used in Balance Sheet
1. A share warrant is a financial instrument which gives the holder the right to acquire equity shares.
2. If company has issued shares but date of allotment falls after the balance sheet date, such application money pending allotment will be shown in Balance Sheet.
3. A non-current Liability is a liability which is not classified as current liability. A liability is classified as current when it satisfies any one of the following conditions:
a. It is expected to be settled in the company’s normal operating cycle.
b. It is held for the purpose of being traded.
c. It is due to be settled within 12 months after the reporting date.
d. The company does not have an unconditional right to offer settlement of the liability for at least 12 months after the reporting date.
4. Long Term provisions are provisions for which the related claims are expected to be settled beyond 12 months after the reporting date are classified as non-current provisions.
5. A trade payable refers to the amount due on account of goods purchased or services received in the normal course of business.
6. Short Term Provisions are provisions for which the related claim is expected to be settled within 12 months after the reporting period.
7. Tangible assets are assets which can be physically seen and touched.
8. Non-Current Investments are Investments which are not held for purpose of resale.
9. An operating cycle is the time between the acquisition of assets for processing and their realization in cash and cash equivalents. Where the normal operating cycle cannot be identified, it is assumed to have duration of 12 months.
10. Current Asset: An asset shall be classified as current when it satisfies any of the
following criteria:
(a) It is expected to be realized in or is intended for sale or consumption in the company’s normal operating cycle.
(b) It is held primarily for the purpose of being traded.
(c) It is expected to be realized within twelve months after the reporting date; or
(d) It is cash or cash equivalents unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
11. Current Investments – Investment which are held to be converted into cash within a short period i.e., within 12 months.
12. Trade receivables refer to the amount due on account of goods sold or services rendered in the normal course of business.
13. Contingent Liabilities are those liabilities which may or may not arise because they are dependent on a happening in future. It is not recorded in the books of accounts but is disclosed in the Notes to Accounts for the information of the users.
14. Capital Commitments – Financial commitments due to activities agreed by the company to be undertaken by it in future.
15. Operating cycle means the time between the acquisition of assets for processing and their realization in cash or cash equivalents. It may vary from few days to few years. Where the operating cycle cannot be identified, it is assumed to have duration of 12 months.