Schedule III Balance Sheet Format for Class 12 Accountancy

Schedule III Balance Sheet format becomes much easier when you stop seeing it as a table to memorise.

Think of it as a carefully arranged building.

One side tells us where the money came from. That is equity and liabilities.

The other side tells us where that money is used or held. That is assets.

Both sides must finally agree because every rupee used by the company must have come from somewhere.

Many students lose marks in this chapter even when their calculations are correct. The reason is usually presentation. Share capital goes in one place, reserves go in another, debentures may be current or non-current depending on timing, and items like trade receivables or trade payables must be written using the proper terms.

Once you learn the pattern, the Balance Sheet feels less like a memory test and more like a sorting exercise.

This guide will help you understand the Schedule III Balance Sheet format in a simple, practical way.

What Schedule III Balance Sheet Format Means

Schedule III is the format prescribed for preparing company financial statements under the Companies Act, 2013.

For Class 12 Accountancy, the Balance Sheet part is the most important. It teaches you how a company’s assets, equity, and liabilities are arranged in a vertical format.

In school questions, you are usually not expected to reproduce every legal disclosure. You are expected to:

• use the correct main heads
• classify items properly
• prepare notes to accounts where needed
• total both sides correctly
• present the answer neatly

The Balance Sheet shows the financial position of a company on a particular date. It does not show profit for the whole year by itself. It shows what the company owns, what it owes, and how much belongs to shareholders at that date.

The Main Structure of Schedule III Balance Sheet

The format has four columns:

Particulars	Note No.	Figures at the end of current reporting period	Figures at the end of previous reporting period
Main heads and sub-heads	Note reference	Current year amount	Previous year amount

In Class 12 questions, you may sometimes prepare only one year column if previous year figures are not given. But you should still understand the full structure.

The Balance Sheet has two broad parts:

1. Equity and Liabilities
2. Assets

Here is the clean master format.

Schedule III Balance Sheet Format

Name of the Company
Balance Sheet as at ............

Particulars                                      Note No.   Current Period   Previous Period

I. EQUITY AND LIABILITIES

1. Shareholders' Funds
   (a) Share Capital
   (b) Reserves and Surplus
   (c) Money received against Share Warrants

2. Share Application Money Pending Allotment

3. Non-Current Liabilities
   (a) Long-term Borrowings
   (b) Deferred Tax Liabilities (Net)
   (c) Other Long-term Liabilities
   (d) Long-term Provisions

4. Current Liabilities
   (a) Short-term Borrowings
   (b) Trade Payables
   (c) Other Current Liabilities
   (d) Short-term Provisions

Total

II. ASSETS

1. Non-Current Assets
   (a) Property, Plant and Equipment
       (i) Tangible Assets
       (ii) Intangible Assets
       (iii) Capital Work-in-Progress
       (iv) Intangible Assets under Development
   (b) Non-current Investments
   (c) Deferred Tax Assets (Net)
   (d) Long-term Loans and Advances
   (e) Other Non-current Assets

2. Current Assets
   (a) Current Investments
   (b) Inventories
   (c) Trade Receivables
   (d) Cash and Cash Equivalents
   (e) Short-term Loans and Advances
   (f) Other Current Assets

Total

You may see “fixed assets” in some classroom material. The modern wording is usually Property, Plant and Equipment, but the learning idea is the same: these are long-term assets used in the business, such as building, machinery, furniture, and vehicles.

Why The Format Is Vertical

Older final accounts often use a horizontal format with liabilities on the left and assets on the right.

Schedule III uses a vertical format. That means you write the headings one below another:

Equity and Liabilities
Less nothing, add nothing, just total the heads

Assets
Total the asset heads

This vertical format is useful because it shows classification clearly.

It helps the reader see:

• how much money belongs to shareholders
• how much is owed for the long term
• how much is payable soon
• how much is invested in long-term assets
• how much is held in current assets

The Golden Rule: Source Of Funds And Use Of Funds

Before placing any item, ask one simple question:

Is this item a source of funds or a use of funds?

If the item tells where money came from	Put it under Equity and Liabilities
If the item tells where money is kept or used	Put it under Assets

For example:

Item	Side	Why
Equity Share Capital	Equity and Liabilities	Money contributed by shareholders
General Reserve	Equity and Liabilities	Profit kept in the company
Debentures	Equity and Liabilities	Borrowed funds
Trade Payables	Equity and Liabilities	Amount owed to suppliers
Machinery	Assets	Resource owned and used by the company
Inventory	Assets	Goods held for sale or production
Trade Receivables	Assets	Amount receivable from customers
Cash at Bank	Assets	Money available with the company

This is the first sorting step.

The second step is current versus non-current.

Current And Non-Current Classification

Schedule III separates many items into current and non-current.

This is where students often get confused.

Use this simple idea:

• current means expected to be realised, sold, consumed, paid, or settled within the normal operating cycle or within 12 months
• non-current means it is expected to stay beyond that period

For assets, ask:

“Will the company convert this into cash, sell it, consume it, or use it up within the normal operating cycle or within 12 months?”

For liabilities, ask:

“Will the company have to settle this within the normal operating cycle or within 12 months?”

Item	Usually current or non-current?
Inventory	Current asset
Trade receivables	Current asset
Cash and cash equivalents	Current asset
Prepaid expenses for the coming year	Current asset
Machinery used in business	Non-current asset
Goodwill	Non-current asset
Long-term investments	Non-current asset
Trade payables	Current liability
Outstanding salary	Current liability
Bank overdraft payable on demand	Current liability
Debentures redeemable after five years	Non-current liability
Long-term provision for employee benefits	Non-current liability

Part I: Equity And Liabilities

Equity and Liabilities is the first half of the Balance Sheet.

It answers:

“Who has a claim on the company’s assets?”

There are four main heads.

1. Shareholders’ Funds

Shareholders’ Funds means the funds belonging to the owners of the company.

It has three sub-heads:

Sub-head	Meaning
Share Capital	Capital raised by issuing shares
Reserves and Surplus	Profits kept in the company and different reserves
Money received against Share Warrants	Money received for instruments that may be converted into shares

In most Class 12 questions, you mainly use Share Capital and Reserves and Surplus.

Share Capital

Share Capital includes equity share capital and preference share capital.

In the Balance Sheet face, you usually show only the final amount and attach a note.

The note may show:

• authorised capital
• issued capital
• subscribed capital
• called-up capital
• paid-up capital
• calls unpaid
• forfeited shares amount, if relevant

Reserves And Surplus

Reserves and Surplus includes amounts such as:

• Capital Reserve
• Capital Redemption Reserve
• Securities Premium
• Debenture Redemption Reserve
• Revaluation Reserve
• General Reserve
• Surplus in Statement of Profit and Loss

If the Statement of Profit and Loss has a credit balance, it is added under surplus.

If it has a debit balance, it is shown as a negative figure under surplus.

This is a common mistake in company accounts.

2. Share Application Money Pending Allotment

Sometimes a company receives application money for shares but has not yet allotted the shares.

If the amount is still pending allotment and is not due for refund, it is shown separately as:

Share Application Money Pending Allotment

It is not included inside Share Capital until shares are actually allotted.

In many school questions, this item is not given. But if it appears, do not hide it under reserves or current liabilities.

3. Non-Current Liabilities

Non-current liabilities are amounts the company is not expected to settle within the normal operating cycle or within 12 months.

The four sub-heads are:

Sub-head	Examples
Long-term Borrowings	Debentures, long-term bank loans, long-term deposits
Deferred Tax Liabilities (Net)	Tax timing difference liability, if given
Other Long-term Liabilities	Long-term trade payables or other long-term dues
Long-term Provisions	Long-term employee benefit provisions or similar provisions

For most Class 12 questions, Long-term Borrowings is the most common.

Examples:

• 10% Debentures redeemable after five years
• Bank loan repayable after three years
• Mortgage loan payable after four years

If a borrowing is payable within 12 months, do not blindly put it under long-term borrowings. Read the wording.

4. Current Liabilities

Current liabilities are amounts expected to be settled soon, usually within the normal operating cycle or within 12 months.

The four sub-heads are:

Sub-head	Examples
Short-term Borrowings	Bank overdraft, short-term bank loan, loan repayable on demand
Trade Payables	Amount payable for goods or services purchased in normal business
Other Current Liabilities	Outstanding expenses, interest accrued, current maturity of long-term debt
Short-term Provisions	Provision for tax, proposed short-term employee benefit provision, provision payable soon

Students often confuse Trade Payables with Other Current Liabilities.

Trade Payables means payable for goods purchased or services received in the normal course of business.

Outstanding salary, rent payable, interest accrued, and expenses payable are not trade payables. They normally go under Other Current Liabilities.

Part II: Assets

Assets are resources owned or controlled by the company.

This side answers:

“Where are the funds used or held?”

Assets are divided into:

1. Non-current assets
2. Current assets

1. Non-Current Assets

Non-current assets are held for long-term use or benefit.

The main sub-heads are:

Sub-head	Examples
Property, Plant and Equipment	Building, machinery, furniture, vehicles, computers
Intangible Assets	Goodwill, patents, trademarks, computer software
Capital Work-in-Progress	Building or machinery still under construction
Intangible Assets under Development	Software or intangible projects still being developed
Non-current Investments	Long-term investments
Deferred Tax Assets (Net)	Tax timing difference asset, if given
Long-term Loans and Advances	Loans and advances recoverable after 12 months
Other Non-current Assets	Any other long-term asset not fitting above

In many student questions, the most common non-current assets are fixed assets, goodwill, and long-term investments.

2. Current Assets

Current assets are expected to be realised, sold, consumed, or converted into cash within the normal operating cycle or within 12 months.

The sub-heads are:

Sub-head	Examples
Current Investments	Investments held for short-term sale or use
Inventories	Stock of goods, raw materials, work in progress, finished goods
Trade Receivables	Amount due from customers for goods sold or services rendered
Cash and Cash Equivalents	Cash in hand, cash at bank, cheques in hand, very liquid balances
Short-term Loans and Advances	Advances recoverable within 12 months
Other Current Assets	Prepaid expenses, income accrued, other current items

Trade Receivables is the Schedule III term for debtors arising from sale of goods or services.

Trade Payables is the Schedule III term for creditors arising from purchase of goods or services.

Notes To Accounts: Why They Matter

The Balance Sheet face does not show every detail.

For example, instead of writing all reserves separately on the face, you may write:

Reserves and Surplus          Note 2       Rs. 2,70,000

Then in Note 2, you show the breakup.

This keeps the Balance Sheet clean.

Notes to accounts are especially useful for:

• Share Capital
• Reserves and Surplus
• Long-term Borrowings
• Current Liabilities
• Non-current Assets
• Current Assets

In many Class 12 solutions, a short note is enough. The note should show the working clearly, not turn into a long explanation.

A Simple Method To Place Any Item

When you see an item in the question, use this four-question method.

Question 1: Is It Equity, Liability, Or Asset?

Ask whether the item represents:

• owner’s claim
• outside claim
• resource owned or controlled by the company

Share capital is owner’s claim.

Loan is outside claim.

Machinery is a resource.

Question 2: Is It Current Or Non-Current?

Ask whether it is expected to be settled, realised, sold, or consumed within 12 months or the operating cycle.

If yes, it is usually current.

If no, it is usually non-current.

Question 3: Which Main Head Fits?

Now choose the correct Schedule III head.

For example:

• debentures after five years: Non-current Liabilities, Long-term Borrowings
• bank overdraft: Current Liabilities, Short-term Borrowings
• inventory: Current Assets, Inventories
• goodwill: Non-current Assets, Intangible Assets

Question 4: Does It Need A Note?

If the item needs a breakup, use a note.

For example, Reserves and Surplus may include General Reserve, Securities Premium, and Surplus in Statement of Profit and Loss. Instead of crowding the Balance Sheet face, show one total and attach a note.

Common Item Placement Table

Use this table for quick revision.

Item in question	Schedule III placement
Equity Share Capital	Shareholders’ Funds, Share Capital
Preference Share Capital	Shareholders’ Funds, Share Capital
Securities Premium	Shareholders’ Funds, Reserves and Surplus
General Reserve	Shareholders’ Funds, Reserves and Surplus
Capital Reserve	Shareholders’ Funds, Reserves and Surplus
Statement of Profit and Loss credit balance	Shareholders’ Funds, Reserves and Surplus
Statement of Profit and Loss debit balance	Negative under Surplus
Debentures redeemable after five years	Non-current Liabilities, Long-term Borrowings
Bank loan repayable after three years	Non-current Liabilities, Long-term Borrowings
Bank overdraft	Current Liabilities, Short-term Borrowings
Trade creditors for goods	Current Liabilities, Trade Payables
Outstanding salary	Current Liabilities, Other Current Liabilities
Interest accrued but not due	Current Liabilities, Other Current Liabilities
Provision for tax	Current Liabilities, Short-term Provisions
Machinery	Non-current Assets, Property, Plant and Equipment
Furniture	Non-current Assets, Property, Plant and Equipment
Goodwill	Non-current Assets, Intangible Assets
Long-term investments	Non-current Assets, Non-current Investments
Stock	Current Assets, Inventories
Debtors for goods sold	Current Assets, Trade Receivables
Cash at bank	Current Assets, Cash and Cash Equivalents
Prepaid insurance	Current Assets, Other Current Assets
Accrued income receivable soon	Current Assets, Other Current Assets

This table is not a substitute for reading the question. It is a starting point.

If the question clearly says an item is payable or receivable after more than 12 months, follow that information.

Solved Example: Schedule III Balance Sheet

Let us prepare a simple Balance Sheet.

The following balances are given for Asha Limited on 31 March 2026:

Item	Amount
Equity Share Capital	Rs. 8,00,000
Securities Premium	Rs. 80,000
General Reserve	Rs. 1,20,000
Surplus in Statement of Profit and Loss	Rs. 70,000
10% Debentures redeemable after five years	Rs. 3,00,000
Bank Overdraft	Rs. 40,000
Trade Payables	Rs. 1,10,000
Outstanding Salary	Rs. 20,000
Provision for Tax	Rs. 50,000
Machinery	Rs. 6,00,000
Furniture	Rs. 1,50,000
Goodwill	Rs. 90,000
Long-term Investments	Rs. 2,00,000
Inventory	Rs. 1,30,000
Trade Receivables	Rs. 1,20,000
Cash at Bank	Rs. 60,000
Advances recoverable within three months	Rs. 2,00,000
Prepaid Insurance	Rs. 40,000

We will prepare the Balance Sheet in Schedule III format.

Step 1: Prepare Equity And Liabilities

Share Capital goes under Shareholders’ Funds.

Securities Premium, General Reserve, and Surplus go under Reserves and Surplus.

Debentures redeemable after five years are long-term borrowings.

Bank overdraft is a short-term borrowing.

Trade Payables are current liabilities.

Outstanding salary is an other current liability.

Provision for tax is a short-term provision.

Step 2: Prepare Assets

Machinery and furniture are Property, Plant and Equipment.

Goodwill is an intangible asset.

Long-term investments are non-current investments.

Inventory, trade receivables, cash at bank, short-term advances, and prepaid insurance are current assets.

Balance Sheet Of Asha Limited

Asha Limited
Balance Sheet as at 31 March 2026

Particulars                                      Note No.        Amount

I. EQUITY AND LIABILITIES

1. Shareholders' Funds
   (a) Share Capital                                1       Rs. 8,00,000
   (b) Reserves and Surplus                         2       Rs. 2,70,000

3. Non-Current Liabilities
   (a) Long-term Borrowings                         3       Rs. 3,00,000

4. Current Liabilities                              4       Rs. 2,20,000

Total Equity and Liabilities                                Rs. 15,90,000

II. ASSETS

1. Non-Current Assets                               5       Rs. 10,40,000

2. Current Assets                                   6       Rs. 5,50,000

Total Assets                                                Rs. 15,90,000

Both totals agree.

Now let us see the notes.

Notes To Accounts

Note 1: Share Capital
Equity Share Capital                                      Rs. 8,00,000

Note 2: Reserves and Surplus
Securities Premium                                        Rs. 80,000
General Reserve                                           Rs. 1,20,000
Surplus in Statement of Profit and Loss                   Rs. 70,000
Total                                                     Rs. 2,70,000

Note 3: Long-term Borrowings
10% Debentures redeemable after five years                Rs. 3,00,000

Note 4: Current Liabilities
Short-term Borrowings: Bank Overdraft                     Rs. 40,000
Trade Payables                                            Rs. 1,10,000
Other Current Liabilities: Outstanding Salary             Rs. 20,000
Short-term Provisions: Provision for Tax                  Rs. 50,000
Total                                                     Rs. 2,20,000

Note 5: Non-Current Assets
Property, Plant and Equipment:
  Machinery                                               Rs. 6,00,000
  Furniture                                               Rs. 1,50,000
Intangible Assets:
  Goodwill                                                Rs. 90,000
Non-current Investments                                   Rs. 2,00,000
Total                                                     Rs. 10,40,000

Note 6: Current Assets
Inventories                                               Rs. 1,30,000
Trade Receivables                                         Rs. 1,20,000
Cash and Cash Equivalents: Cash at Bank                   Rs. 60,000
Short-term Loans and Advances                             Rs. 2,00,000
Other Current Assets: Prepaid Insurance                   Rs. 40,000
Total                                                     Rs. 5,50,000

This is the style of working that helps in exams. The main Balance Sheet stays neat, and the notes show the breakup.

How To Practise This Format

Do not try to learn the whole chapter by reading the format again and again.

Practise in layers.

Layer 1: Memorise The Main Heads

First learn only this structure:

Equity and Liabilities
1. Shareholders' Funds
2. Share Application Money Pending Allotment
3. Non-current Liabilities
4. Current Liabilities

Assets
1. Non-current Assets
2. Current Assets

If you know this, you already know the skeleton.

Layer 2: Learn The Sub-Heads

Then learn the sub-heads under each main head.

For example, Current Assets has:

• Current Investments
• Inventories
• Trade Receivables
• Cash and Cash Equivalents
• Short-term Loans and Advances
• Other Current Assets

Do this for each main head.

Layer 3: Practise Item Placement

Make a list of 30 common items and place them under the correct heads.

Do not calculate anything at first.

Just practise sorting.

For example:

Item	Placement
Debtors	Trade Receivables
Creditors	Trade Payables
Patents	Intangible Assets
Bank overdraft	Short-term Borrowings
Proposed tax provision	Short-term Provisions

Once placement becomes automatic, full questions become much easier.

Layer 4: Add Notes

After that, practise preparing notes.

A good note is clear and compact.

It should show:

• the item names
• the amounts
• additions or deductions if any
• the final total carried to the Balance Sheet

Layer 5: Solve Full Questions

Finally, solve full Balance Sheet questions with adjustments.

When checking your answer, do not only ask:

“Did the total match?”

Also ask:

“Did I place every item under the correct Schedule III head?”

A Balance Sheet can sometimes agree even when one item has been placed under the wrong head. So placement matters.

Common Mistakes Students Make

Mistake 1: Writing Sundry Debtors And Sundry Creditors

In company Balance Sheet format, use:

• Trade Receivables
• Trade Payables

These terms are more appropriate for Schedule III.

Mistake 2: Putting Securities Premium With Share Capital

Securities Premium is not added directly to Share Capital.

It is shown under Reserves and Surplus.

Mistake 3: Treating Every Loan As Long-Term

Read the time period.

A bank loan repayable after five years is long-term.

A loan payable on demand or within 12 months is current.

Mistake 4: Putting Outstanding Expenses Under Trade Payables

Trade Payables are mainly for goods purchased or services received in the normal course of business.

Outstanding salary, rent payable, interest accrued, and similar expenses usually go under Other Current Liabilities.

Mistake 5: Forgetting Notes To Accounts

If the Balance Sheet has note numbers, prepare the notes.

A total without working can look incomplete, especially when several items are combined under one head.

Mistake 6: Showing Goodwill As A Current Asset

Goodwill is an intangible asset. It belongs under non-current assets.

Mistake 7: Ignoring Negative Surplus

If the Statement of Profit and Loss has a debit balance, show it as a negative figure under Surplus.

Do not show it as an asset just because it has a debit balance.

Mistake 8: Using The Wrong Total Check

The final check is:

Total Equity and Liabilities = Total Assets

Do not compare only current liabilities with current assets. That is a separate liquidity idea, not the final Balance Sheet agreement.

A Quick Memory Map

Here is a compact way to remember the whole format.

Equity and Liabilities
Owner funds
Pending share application money
Long-term outside claims
Short-term outside claims

Assets
Long-term resources
Short-term resources

That is the heart of Schedule III Balance Sheet format.

If an item is a source of money or a claim against the company, it belongs in Equity and Liabilities.

If an item is owned, controlled, recoverable, or usable by the company, it belongs in Assets.

Then decide whether it is current or non-current.

For example:

Item	First mark	Second mark	Final placement
Trade receivables	A	C	Current Assets
Machinery	A	NC	Non-current Assets
Bank overdraft	L	C	Current Liabilities
Debentures after five years	L	NC	Non-current Liabilities
General Reserve	E	NC	Shareholders’ Funds

This method is simple, but it prevents many mistakes.

Final Revision Checklist

Before submitting a Schedule III Balance Sheet answer, check these points:

• Have you written the company name and Balance Sheet date?
• Have you used the vertical format?
• Have you written Equity and Liabilities first?
• Have you written Assets after that?
• Have you used Trade Receivables instead of Sundry Debtors?
• Have you used Trade Payables instead of Sundry Creditors?
• Have you placed Securities Premium under Reserves and Surplus?
• Have you separated current and non-current items correctly?
• Have you prepared notes where totals need breakup?
• Do total equity and liabilities equal total assets?

Frequently Asked Questions

What is Schedule III Balance Sheet format?

Schedule III Balance Sheet format is the prescribed company Balance Sheet structure under the Companies Act, 2013. In Class 12 Accountancy, it is used to present Equity and Liabilities and Assets in a vertical format with proper heads and notes to accounts.

What are the two main parts of a Schedule III Balance Sheet?

The two main parts are Equity and Liabilities, and Assets. Equity and Liabilities shows shareholders’ funds and amounts owed by the company. Assets shows resources owned or controlled by the company.

What comes under Shareholders’ Funds?

Shareholders’ Funds includes Share Capital, Reserves and Surplus, and Money received against Share Warrants. In most school questions, Share Capital and Reserves and Surplus are the most common.

Where is Securities Premium shown in the Balance Sheet?

Securities Premium is shown under Reserves and Surplus, which comes under Shareholders’ Funds. It should not be added directly to Share Capital.

What is the difference between current and non-current items?

Current items are expected to be realised, consumed, paid, or settled within the normal operating cycle or within 12 months. Non-current items are expected to stay beyond that period.

Where are debtors shown in Schedule III Balance Sheet?

Debtors from sale of goods or services are shown as Trade Receivables under Current Assets.

Where are creditors shown in Schedule III Balance Sheet?

Creditors for goods purchased or services received in the normal course of business are shown as Trade Payables under Current Liabilities.

Is goodwill a current asset?

No. Goodwill is an intangible asset, so it is shown under Non-current Assets.

Where is bank overdraft shown?

Bank overdraft is usually shown under Current Liabilities as Short-term Borrowings, especially when it is payable on demand.

How do I know whether debentures are current or non-current?

Read the redemption date. Debentures redeemable after more than 12 months are usually shown as Long-term Borrowings under Non-current Liabilities. If the amount is due within 12 months, the current portion is treated as a current liability.

Are notes to accounts compulsory in Schedule III questions?

Notes to accounts are important whenever a Balance Sheet head contains more than one item or needs a breakup. They make the answer cleaner and show how the final amount was calculated.

What is the easiest way to learn Schedule III Balance Sheet format?

First learn the main heads, then the sub-heads, then practise placing common items. After that, practise notes to accounts and full questions. Do not start by memorising every line at once.