Question

Classify the following items under the main heads and sub-heads (if any) of the Company's Balance Sheet according to Schedule III, Part I of Companies Act, 2013:

(i) Outstanding expenses

(ii) Work-in-progress

(iii) Capital Advances

Hint:

Outstanding expenses are other current liabilities. Work in progress is part of inventories. Capital advances are long term loans and advances.

Answer 1

Step 1: Recall the rule:
Schedule III, Part I of the Companies Act, 2013 gives the Balance Sheet of a company in a fixed format. Every item sits under a major head (such as Non-Current Assets or Current Liabilities) and then under a sub-head. The 12 months from the Balance Sheet date decide whether an item is current or non-current.

Step 2: Classify Outstanding expenses.
Outstanding expenses are expenses that have been incurred but not yet paid, such as unpaid wages or rent. They are payable soon, so they are current. They are not trade payables or provisions, so they go under other current liabilities.
Major head: Current Liabilities. Sub-head: Other Current Liabilities.

Step 3: Classify Work in progress.
Work in progress is goods that are partly made and not yet complete. They will be completed and sold within the operating cycle. Schedule III shows raw materials, work in progress and finished goods as inventories.
Major head: Current Assets. Sub-head: Inventories.

Step 4: Classify Capital advances.
Capital advances are amounts paid in advance to suppliers of fixed assets, such as machinery not yet delivered. The benefit comes as a fixed asset after more than a year, so they are non-current. Schedule III shows them as long term loans and advances.
Major head: Non-Current Assets. Sub-head: Long Term Loans and Advances.

Step 5: Summary table:

Item	Major head	Sub-head
Outstanding expenses	Current Liabilities	Other Current Liabilities
Work in progress	Current Assets	Inventories
Capital advances	Non-Current Assets	Long Term Loans and Advances

Final Answer:
Outstanding expenses: Current Liabilities - Other Current Liabilities; Work in progress: Current Assets - Inventories; Capital advances: Non-Current Assets - Long Term Loans and Advances.