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read trial balance sheet with explaining all the equity & liability and asset

The trial balance of Chota Bhim Ltd. as on 31st March 2024 lists various accounts under two categories: **debit and credit**. These accounts are grouped into two primary sections, **assets** and **liabilities/equity**, which is typical for financial reporting. Below is an explanation of each item, categorized into **Equity & Liabilities** and **Assets**:

### **Equity & Liabilities**:

1. **10% Debentures (Rs. 2,00,000)**:
   - **Liability**: This represents a long-term borrowing where the company has issued debentures with a fixed interest rate of 10%. Chota Bhim Ltd. is liable to pay interest to debenture holders and the principal amount in the future.

2. **Provision for Tax (Rs. 16,000)**:
   - **Liability**: A provision set aside to cover the estimated tax liability for the current or upcoming financial year. This is a current liability since it will likely be settled within the next year.

### **Assets**:

1. **Preliminary Expenses (Rs. 2,40,000)**:
   - **Asset**: These are non-recurring expenses incurred during the formation of the company, such as legal fees or registration costs. Although not a tangible asset, they are listed as deferred expenses and amortized over time.

2. **Stock in Trade (Rs. 1,40,000)**:
   - **Asset**: This represents the value of goods available for sale at the end of the accounting period. It's a part of the current assets since it is expected to be sold within a year.

3. **Cash at Bank (Rs. 1,35,000)**:
   - **Asset**: Cash available in bank accounts is one of the most liquid assets. It can be used immediately to meet obligations, hence classified under current assets.

4. **Bills Receivables (Rs. 1,20,000)**:
   - **Asset**: This refers to the amount due to the company from customers who have accepted bills of exchange. It is also part of the current assets, as it is expected to be converted into cash soon.

5. **Goodwill (Rs. 30,000)**:
   - **Asset**: Goodwill represents the company's reputation and customer loyalty. It is an intangible asset that usually arises when one company acquires another and pays more than the fair market value.

6. **Loose Tools (Rs. 12,000)**:
   - **Asset**: These are small tools used in day-to-day operations. They are considered tangible assets but due to their nature, they are categorized as current or non-current assets based on their useful life.

7. **Motor Vehicles (Rs. 4,75,000)**:
   - **Asset**: The value of the company’s motor vehicles, which are tangible fixed assets. These assets are used for business operations and depreciated over time.

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### **Summary**:

- **Total Assets**: 
   1. Preliminary Expenses: Rs. 2,40,000
   2. Stock in Trade: Rs. 1,40,000
   3. Cash at Bank: Rs. 1,35,000
   4. Bills Receivables: Rs. 1,20,000
   5. Goodwill: Rs. 30,000
   6. Loose Tools: Rs. 12,000
   7. Motor Vehicles: Rs. 4,75,000

- **Total Liabilities**: 
   1. 10% Debentures: Rs. 2,00,000
   2. Provision for Tax: Rs. 16,000

In total, the trial balance provides a snapshot of the company's financial position, listing all debit balances (mostly assets) and credit balances (liabilities and equity). The balance helps ensure the company's financial records are accurate, as it ensures total debits match total credits.

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Would you like a detailed explanation of any specific item? Here are five related questions to explore further:

1. What is the significance of goodwill in a company’s balance sheet?
2. How does the company account for depreciation on motor vehicles?
3. What are the key differences between current and non-current liabilities?
4. How is stock in trade valued in a company’s trial balance?
5. What is the impact of debentures on a company's financial health?

**Tip**: Always ensure the trial balance is balanced, meaning the total debit and credit amounts must be equal.

Read trial balance sheet with explaining all the equity & liability and asset

A detailed analysis of the trial balance of Chota Bhim Ltd. as on 31st March 2024. This report explains all assets, liabilities, and equity items such as 10% Debentures, Provision for Tax, and various assets like Preliminary Expenses, Stock in Trade, Motor Vehicles, and more.

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