Negative balance symbol

PAT will be added to reserves in balance sheet.

So either profit or loss will be added to reserves and surplus.

If it is profit then it will be added to reserves
If it is loss then it will be substracted from reserves.

If a company incurring continuously losses then you may find negative balance in Reserves and Surplus

Company’s networth can change due to two factors — infusion of capital and the profits or losses from operations. Any addition to capital by way of a fresh share issue will result in an increase in networth. Likewise, if the company has surplus profit available after paying dividend to its shareholders, this will be transferred to its reserves and surplus, and increase its networth. If an enterprise reels under losses, that will lead to a depletion in the networth.

Besides all this, of course, if a firm decides to pay dividend far higher than the outstanding balance in its reserves and surplus account, it may lead to a negative or deficit networth.

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In addition to above I would like to add as per schedule III of the Companies Act 2013 , Debit balance of profit and loss (loss) shall be shown as a negative figure under the head "surplus" similarly the balance of " Reserve Surplus " after adjusting negative balance of surplus , if any shall be shown under the head Reserve Surplus , even if resulting figure is negative .

In Tally why the current balance shows in red colour in transactions

It shows negative balance

 

It shows negative balance

Disable running balance

Reserves and surplus is shown under one head . profit and loss account negative balance means there is a loss which is added to the profit and loss account and adjusted.

Profits are accumulated in reserves . So loss also has to be adjusted against the reserves