We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.

Key takeaways from this chapter

  1. The Assets side of the Balance sheet displays all the company’s assets.
  2. Assets are expected to give an economic benefit during their useful life.
  3. Assets are classified as Non-current and Current assets.
  4. The useful life of Non-current assets is likely to last beyond 365 days or 12 months.
  5. Current assets are expected to pay off within 365 days or 12 months.
  6. Assets inclusive of depreciation are called the ‘Gross Block.’
  7. Net Block = Gross Block – Accumulated Depreciation
  8. The sum of all assets should equal the sum of all liabilities. Only then the Balance sheet
  9. is said to have balanced.
  10. The Balance sheet and P&L statement are inseparable. They are connected in many ways.


  1. Vivek BM says:

    what is the interpretion of Decreasing Non Current asset and increase in current asset?

    • Karthik Rangappa says:

      A decrease in long-term assets means the company is selling off stuff. YOu need to figure why they are doing it. Maybe because debt is high? Increase in current assets means the company’s working capital is improving.

  2. MM says:

    Sum of all assets is equal to sum of all liabilities ensures balance sheet is balanced. What is meant by this statement? As pe rmy understanding, if assets value more than liabilities then it represents good financial health.

    • Karthik Rangappa says:

      From a balance sheet perspective, if assets are more than a liability, then how is the company financing such assets?

  3. Vimit says:

    I did not understand the other equity part. how it is part of liability?

    • Karthik Rangappa says:

      You need to look at it from the company’s point of view, Vimit. From the company’s POV, networth is a liability to its shareholders.

  4. steve says:

    sir ,
    I have one doubt that where we can get these information about [document]

  5. Anirban Basak says:


    Are the reserves and surpluses represents “Treasury share”?

  6. Anirban Basak says:


    Is this the portion of the PAT coming from contribution of the executive people/ promoters that are getting added up to the reserves and surpluses equity?

  7. Akila says:

    Could you please explain the 8th point in Key Takeaway with example.

    • Karthik Rangappa says:

      8 and 9 is supposed to be just one point 🙂
      Basically, it means that a company’s assets should equal the company’s liabilities. Only then the balance sheet is said to be balanced.

  8. Akila says:

    Yeah sure, but still I am not clear with this point. It is mandatory that a company’s asset and liability should be equal?
    If the company has 50 crore liability and 50 crore of asset, means that this liability taken is to purchase the asset?

  9. Pruthivi Raj says:

    Hi sir, how total assets would be equal to liabilities? In general terms if I have some assets, ie house, gold diamonds, land etc then all these ate assets but liabilities are a kind of something u owe to somebody and have to pay in some stipulated time. So my confusion lies here

    • Karthik Rangappa says:

      For an individual it maybe different as many things are unaccounted for, but when you think about it from a company’s perspective, it does make sense as everything is accounted for. The difference if any, is the networth of the company.

  10. Aman Gupta says:

    As an individual share holder of the company, what parameters should be checked and tracked to identify fundamental disruptions in the business of company .

    • Karthik Rangappa says:

      YOu need to check the industry trends, and perhapse keep track of latest developments. Usually, this also shows up in the company’s financial statements.

  11. Hitarthi says:

    In the key take aways one point is mentioned of net block is equal to gross block less accumulated depreciation – what is it’s meaning?

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