Accountancy Part AAccounting for Shares

Which among the following item does not appear on the balance sheet o…

Which among the following item does not appear on the balance sheet of a company?

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → Contingent Liabilities

A contingent liability is a possible obligation that will arise only if some future event happens, for example a claim against the company that is still being decided in court. Since it is not yet a liability, it is not shown on the face of the balance sheet; Schedule III requires it to be disclosed in the notes to accounts as "Contingent liabilities and commitments (to the extent not provided for)". A proposed dividend, which becomes a liability only after the shareholders approve it, is one example.

Option (1) Reserve and Surplus — An item on the balance sheet. It is a sub-head of Shareholders' Funds.

Option (2) Share capital — An item on the balance sheet. It is the first sub-head of Shareholders' Funds.

Option (4) Fixed assets — An item on the balance sheet. They appear under non-current assets (property, plant and equipment and intangible assets).

NCERT (2026-27 edition):
Proposed Dividend – “… Since declaration of proposed (final) dividend is contingent upon shareholders approval, Proposed dividend is shown as contingent liability. AS-4, Contingencies and Events Occurring after the Balance Sheet Date prescribes that proposed dividend will be shown in the Notes to Accounts.”