Estimated Balance Sheet & Profit and Loss Account
An Estimated Balance Sheet & Profit and Loss Account is a provisional financial statement prepared based on projected income, expenses, assets, and liabilities for a future period. These estimates help businesses in financial planning, loan applications, and tax assessments.
1. Estimated Balance Sheet
An Estimated Balance Sheet presents a forecast of assets, liabilities, and equity for a specific date in the future. It helps businesses understand their expected financial position and plan investments or funding.
Format of an Estimated Balance Sheet
| Particulars | Amount (₹) |
|---|---|
| Assets: | |
| Fixed Assets (Machinery, Equipment) | XXX |
| Current Assets (Cash, Inventory, Debtors) | XXX |
| Investments | XXX |
| Total Assets | XXX |
| Liabilities & Equity: | |
| Loan & Borrowings | XXX |
| Creditors (Payables) | XXX |
| Owner’s Equity (Capital + Retained Earnings) | XXX |
| Total Liabilities & Equity | XXX |
2. Estimated Profit & Loss Account
An Estimated Profit & Loss Account predicts the future income and expenses of a business over a specific period (monthly, quarterly, or yearly). It helps businesses set revenue targets and control costs.
Format of an Estimated Profit & Loss Account
| Particulars | Amount (₹) |
|---|---|
| Revenue: | |
| Sales Revenue | XXX |
| Other Income (Interest, Rent) | XXX |
| Total Revenue | XXX |
| Expenses: | |
| Cost of Goods Sold (COGS) | XXX |
| Operating Expenses (Rent, Salaries, Marketing) | XXX |
| Depreciation | XXX |
| Interest & Taxes | XXX |
| Total Expenses | XXX |
| Net Profit (Revenue – Expenses) | XXX |
Purpose of an Estimated Balance Sheet & P&L Account:
✅ Loan & Investment Applications – Required for bank loans & investor funding.
✅ Business Planning – Helps in forecasting revenue & controlling expenses.
✅ Tax Compliance & GST Filing – Used for advance tax payments & audits.
✅ Financial Decision-Making – Helps businesses assess profitability & growth potential.
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