Balance sheet has two sections one is asset and other is liability, liability side of the balance sheet depicts the items which company owes to outsiders. It can be divided into 5 major categories, given below are the various items which are shown in liability side of balance sheet –
- Share Capital – It includes equity share capital, preference shares and other such capital
- Reserves and Surplus – It includes general reserve, profit of current year, revaluation reserve, share premium and so on.
- Secured Loan – It includes all the debts which are long term in nature (that is they are repayable after 1 year) and they are secured by the mortgage on company’s assets. It includes bank loan, debentures, fixed deposits accepted by the company and other such debts.
- Unsecured Loan – Any long term loan which is not secured would come under this category.
- Current Liabilities – All debts which are repayable within a year are called current liabilities, some examples of it are creditors, accounts payable, unearned income, accrued expenses, provision for taxation etc….