mal business operations of the enterprise. According to Grady, meterm currentAssets is used to designate cash and other assets or resources commonly identified as those which are reasonably expected to be realized in cash or sold during the normal operating cycle of the business. Thus, the term "Current Assets" includes cash and bank balances, stocks of raw materials, work-in-progress and finished goods, debtors, bills receivable, short-term investments, prepaid expenses, etc. (b) Liquid assets. Liquid Assets are those assets which are immediately convertible into cash without much loss. Liquid Assets are a part of current asset. In computing liquid assets, stock of raw materials, work-in-progress and finished goods and prepaid expenses are excluded while all other current assets are taken. (e) Fixed assets. Fixed assets are those assets which are acquired for relatively long periods for carrying on the business of the enterprise. They are not meant for resale. Land and building, machinery, furniture are some of the example of Fixed Assets. Sometimes, the term "Block Capital is also used for them. (d) Intangible assets. Intangible Assets are those assets which cannot be seen and touched. Goodwill, patents, trade marks, etc., are some examples of Intangible Assets. (0) Fictitious assets. There are assets not represented by tangible possession or property. Examples of such assets are formation expenses incurred for establishing a business such as registration charge paid to the registrar of joint stock company for getting a company incorporated, discount on issue of shares, debit balance in the Profit and Loss Account when shown on the assets side in case of a joint stock company etc. Difference between a Trial Balance and Balance Sheet The difference between a trial balance and balance sheet can be put as under: (a) Meaning. A trial balance is a statement containing various ledger balances on a particular date while a balance sheet is a statement of various assets and liabilities of the business on a particular date. (b) Objective. The objective of preparation of a trial balance is to check the arithmetical accuracy of the books of account of the business. While the objective of preparation of a balance sheet is to ascertain the financial position of the business, () Item covered. Atrial balance contains all items relating toincomes, expenses, assets and liabilities while a balance sheet incorporates only assets and liabilities. Paul Grady. "Inventory of Generally Accepted Accounting Principles for Business Enterprises", pp. 234-35. 8 46 j46 (d) Preparation. A trial balance is prepared before preparation of a balance sheet. In other words, the preparation of a trial balance is independent of preparation of a balance sheet. While a balance sheet is prepared not only on the basis of trial balance but also of any additional information which may not have been incorporated in the trial balance. (e) Use. Atrial balance is meant only for internal use. While a balance is prepared both for internal as well as external use. Illustration 6.9. From the following balance extracted from the books of M/s Rajendra Kumar Gupta & Co., pass the necessary closing entries, prepare a Trading and Profit and Loss Account and a Balance Sheet. Particulars RS Particulars Rs Opening Stock 1.250 Plant and Machinery 6.230 Sales 11,800 Returns Outwards 1.380 Depreciation 667 Cash in hand 895 Commission (Cr.) 211 Salaries 750 Insurance 380 Debtors 1.905 300 Discount (Dr.) 328 Furniture 670 Bills Receivable 2.730 Printing Charges 481 Wages 1.589 Carriage Outwards 200 Returns Inwards 1.659 Capital 9.228 Bank Overdraft 4,000 Creditors 1.780 Purchases 8.679 Bills Payable 541 Petty Cash in Hand Bad Debts 180 Carriage Inwards 47 The value of stock on 31st December, 1999 was Rs 3.700