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PREPARE FINAL
ACCOUNTS OF
PUBLIC LIMITED
COMPANIES ?
by :
DR. T.K. JAIN
AFTERSCHO☺OL
centre for social entrepreneurship
sivakamu veterinary hospital road
bikaner 334001 rajasthan, india
FOR – PGPSE PARTICIPANTS
mobile : 91+9414430763
PREFACE
Ours is a great country with immense
entrepreneurial potential. However, our legal
system is so cumbersome that our creativity
and talent is wasted / unnecessarily diverted in
these sectors. I wish that these are simplified
so that an ordinary entrepreneur can
understand these without help from any expert.
I wish that more people should become
entrepreneurs, rather than becoming an expert
in avoiding taxation. Let us wish that some
likeminded person is able to reach policy
making level and is able to change these. I
have tried to simplify legal system with regard
to accounting / reporting for Indian
entrepreneurs – but it is so complicated that
even if you simplify it, it will remain
complicated. An ordinary Indian entrepreneur
wishes to remain an honest entrepreneur and
contribute to the development of the nation, so
latest honestly work to simplify our legal
systems and let us hope that law should be
made by those who practice it in their day to
day life. Just read the language of law, it is so
difficult that an ordinary person cannot
understand it – not to talk about remembering
it .....
OBJECTIVES OF THIS E-BOOK
To familiarise the entrepreneurs with the statutory requirements of companies
act in India regarding format of balance sheet and profit and loss account.
Download links :
http://www.scribd.com/doc/11627269/Final-Accounts
http://www.scribd.com/doc/22783825/Accounting-Process
http://www.scribd.com/doc/14676163/Accounting
http://www.scribd.com/doc/19492869/Accounting
http://www.scribd.com/doc/28442846/Accounting-for-Entrepreneurs
http://www.scribd.com/doc/28013426/Accounting-for-Public-Companies
2. Profit and Loss Account for that period disclosing the results of the
operations of the company (for the entire financial year)
1. Every balance sheet a company shall give a true and fair view of the
state of affairs of the company as at the end of the financial year and
shall, subject to the provisions of this section, in the format of Part I of
Schedule VI along with the prescribed notes
a. banking companies
b insurance companies
2. Every profit and loss account of a company shall give a true and fair view
of the profit or loss of the company for the financial year and will be as
per Part II of Schedule VI:
a. banking companies
b insurance companies
Every profit and loss account and balance sheet of company shall
comply with the accounting standards and if there is any deviation
from accounting standards, following must be disclosed : (a)
deviation from the accounting standards; (b) the reasons for such
deviation, and (c) the financial effect, if any, arising due to such
deviation.
Since every balance sheet of a company shall in the form set out in Part I of
Schedule VI and every profit and loss account of a company shall comply with
the requirements of Part II of Schedule VI, or as near thereto as circumstances
admit it is important to study Schedule VI very carefully. A detailed discussion is
made on Schedule VI as follows:
It also indicates the information relating to different assets and liabilities which
should be disclosed, therein. Besides there are general instructions at the end
of the form which must be followed in preparing the balance sheet.
Part II - Part II of Schedule VI P & L Account – the company may adopt any
format – as no format is given. .
Part III - Part III of Schedule VI contains the interpretation of certain terms.
A. Horizontal Form
Fig Fig
s. s.
Figs. Figs.
for For
For for
the the
the the
LIABILITIES curr pre ASSETS
prev. curr.
. v.
year Year
Yea yea
Rs. Rs.
r r
Rs. Rs.
3. Immovable
properties.
4. Investments
in the capital
of partnership
firms.
5. Balance of
unutilised
monies raised
by issue.
Notes:
(1) Aggregate
amount of
company’s
quoted invest-
ments and
also the
market value
thereof shall
be shown.
(2) Aggregate
amount of
company’s
unquoted
invest-ments
shall also be
shown.
(3) All
unutilised
monies out of
the issue must
be separately
disclosed in
the Balance
Sheet of the
company
indicating the
form in which
such unutilised
funds have
been invested.
Current
Assets, Loans
and
Advances:
(A) Current
Assets
1. Interest
accrued on
investments.
2. Stores and
spare parts.
3. Loose tools.
4. Stock-in-
trade.
5. Work-in-
progress.
Notes:
(1) Mode of
valuation of
stock shall be
stated and the
amount in
respect of raw
materials shall
also be stated
separately
where
practicable.
(2) Mode of
valuation of
works-in-
progress shall
be stated.
6. Sundry
debtors:
(a) Debts
outstanding for
a period
exceeding six
months.
(b) Other
debts.
Less:
Provision
Notes:
(1) The
amounts to be
shown under
sundry debtors
shall include
the amounts
due in respect
of goods sold
or services
rendered or in
respect of
other
contractual
obligations but
shall not
include the
amounts
which are in
the nature of
loans or
advances.
(2) In regard to
sundry debtors
particulars to
be given
separately of:
(a) debts
considered
good and in
respect of
which the
company is
fully secured;
(b) debts
considered
good for which
the company
holds no
security other
than the
debtors
personal
security; and
(c) debts
considered
doubtful or
bad.
(5) The
maximum
amount due by
directors or
other officers
of the
company at
any time
during the
year to be
shown by way
of a note.
(6) The
provision to be
shown under
this head
should not
exceed the
amount of
debts stated to
be considered
doubtful or
bad and any
surplus of
such
provision, if
already
created,
should be
shown at
every closing
under
“Reserves and
Surplus” (on
the Liabilities
side) under a
separate sub-
head
(“Reserve for
Doubtful or
Bad Debts”).
(7A) Cash
balance on
hand.
(7B) Bank
Balances:
(a) With
Scheduled
Banks; and
(b) With
others.
Notes:
In regard to
bank
balances,
particulars to
be given
separately of:
(a) the
balances lying
with scheduled
banks on
current
accounts, call
accounts and
deposit
accounts;
(d) All
unutilised
monies out of
the issue must
be separately
disclosed in
the balance
sheet of the
company
indicating the
form in which
such unutilised
funds have
been invested.
(8) (a)
Advances and
Loans to
subsidiaries.
(b) Advances
and loans to
partnership
firms in which
the company
or any of its
subsidiaries is
a partner.
(9) Bills of
Exchange.
(10) Advances
recoverable in
cash or in kind
or for value to
be received,
e.g., rates,
taxes,
insurance, etc.
(11) Balance
with Customs,
Port Trust, etc.
(where
payable on
demand).
Notes:
(1) The
instructions
regarding
sundry debtors
apply to
“Loans and
Advances”
also.
(2) The
amounts due
from other
companies
under the
same
management
within the
meaning of
Sub-section
(1B) of Section
370 should
also be given
with the
names of the
companies;
the maximum
amount due
from everyone
of these at any
time during the
year must be
shown.
Miscellaneous
Expenditure:
(2) Expenses
including
commission or
brokerage on
underwriting or
subscription of
shares or
debentures.
(3) Discount
allowed on the
issue of
shares or
debentures.
(4) Interest
paid out of
capital during
construction
(also stating
the rate of
interest).
(5)
Development
expenditure
not adjusted.
(6) Other
sums
(specifying
nature).
Profit and
Loss Account:
(Show here
the debit
balance of
profit and loss
account
carried
forward after
deduction of
the
uncommitted
reserves, if
any).
General Notes
1. Dividends declared by subsidiary companies after the date of the balance sheet
should not be included unless they are in respect of period which closed on or
before the date of the balance sheet.
2. Information relating to benefits expected from contracts to the extent not executed
shall not be made in the balance sheet but shall be made in the Board’s report.
3. Information must be given about redeemed debentures, which the company may
reissue.
4. Information must be given about debentures held by trustees / nomnees.
5. Detailed information should be given about trade investments (which is part of
current assets) – if these investments are in any partnership firms or in companies
with same management, the details should be furnished.
6. If there is any doubtful debt / assets, the board of director must mention their view
about that.
7. Each item must contain information about the amount mentioned last year. For
example – if you are showing buildings as Rs. 2 Crore, what was it just last year. So
mention it.
8. Current accounts of directors and manager (if any), whether credit or debit, must be
shown separately.
9. If there is some additional information, give it as a schedule. .
10.You can give information in paise also – if it is desired.
11.The terms ‘appointed day’, ‘buyer’, ‘enterprise’, ‘micro enterprise’, ‘small enterprise’
and ’supplier’, shall be as defined under clauses (b), (d), (e), (h), (m) and (n)
respectively of section 2 of the Micro, Small and Medium Enterprises Development
Act, 2006.
B - Vertical Form
Figures as
at the end
Schedul Figures as at the end of
of previous
e No. current financial year
financial
year
(1) (2) (3) (4)
I. Sources of Funds
(1) Shareholders’ funds:
(a) Capital ... ... ...
(b) Reserves and surplus ... ... ...
(2) Loan funds:
(a) Secured loans ... ... ...
(b) Unsecured loans ... ... ...
TOTAL ... ... ...
II. Application of Funds
(1) Fixed assets:
(a) Gross block ... ... ...
(b) Less depreciation ... ... ...
(c) Net block ... ... ...
(d) Capital work in progress ... ... ...
(2) Investments
(3) Current assets, loans and
advances:
(a) Inventories ... ... ...
(b) Sundry debtors ... ... ...
(c) Cash and bank balances ... ... ...
(d) Other current assets ... ... ...
(e) Loans and advances ... ... ...
Less: Current Liabilities and
Provisions:
(a) Liabilities ... ... ...
(b) Provisions ... ... ...
Net current assets ... ... ...
(4) (a) Miscellaneous expenditure
to the extent not written off or ... ... ...
adjusted
(b) Profit and loss account ... ... ...
TOTAL ... ... ...
Notes:
PART II
2. The profit and loss account: will give proper information and will give
details regarding non-recurring expenditure.
3. The profit and loss account shall set out the various items
relating to the income and expenditure of the company
arranged under the most convenient heads; and in particular,
shall disclose the following information in respect of the period
covered by the account:
b. repayment of loans.
c. Rent.
d. Repairs to buildings.
e. Repairs to machinery.
g. Insurance.
i. Miscellaneous expenses:
c. Miscellaneous income.
a. pensions,
b. gratuities,
4B. The profit and loss account shall further contain or give by way of
a note detailed information in regard to amounts paid to the auditors,
whether as fees, expenses or otherwise for services rendered -
a. as auditor,
i. taxation matters;
4D. The profit and loss account shall also contain by way of a note
the following information namely:
a. value of imports calculated on C.I.F. basis by the company
during the financial year in respect of -
i. raw materials;
6. (1) for each item in P & L account, show the amount last year. (unless it
is the first year).
PART III
Interpretation
7. (1) For the purpose of Parts I and II of this Schedule, unless the context
otherwise requires -
a. the expression “Provision” shall, subject to sub-
clause (2) of this clause, mean any amount written
off or retained by way of providing for depreciation,
renewals or diminution in value of assets, or
retained by way of providing for any known liability
of which the amount cannot be determined with
substantial accuracy;
2. Where -
PART IV
I. Registration
Details
Yea
Date Month
r
II. Capital Raised during the Year (Amount in Rs. Thousands)
Sources of Funds
Application of Funds
Accumulated Losses
Product
Description
Product
Description
Product
Description
*Note: for ITC Code of Products please refer to the publication Indian Trade
Classification based on harmonized commodity description and coding system
by Ministry of Commerce, Directorate General of Commercial Intelligence &
Statistics Calcutta - 700 001.
Annexure I
i. The Profit and Loss Account, proper, should include all income and
expenditure properly attributable to the year’s working and show the
figure of Profits or Loss for the year, and
When the Profit and Loss Account is spilt up in two parts, i.e., (i) Profit and Loss
Account, proper, and (ii) Profit and Loss Appropriation Account, a line of
demarcation is drawn in between the two parts to separate the items
chargeable against profits from the items of appropriation or disposition of
profits. The items which are shown in the Profit and Loss Account proper are
referred to as items appearing “Above the line” and the items which are shown
in the appropriation section of the Profit and Loss Account are referred to as
items appearing “Below the line”.
The corresponding amounts of incomes and expenses for the immediately
preceding financial year should be stated in the Profit and Loss Account except
in the case of the first Profit and Loss Account after incorporation. The Profit
and Loss Account should be made out in such a manner that it discloses a “true
and fair” view of the profit earned or loss incurred by the company during the
financial year. This implies that the items which are not related to the company’s
business or the items which are related to the previous years or the items of
exceptional nature should be stated separately.
6. The Profit and Loss Account can be prepared either (a) in the
conventional form of a ledger account, or (b) in the form of a statement.
Account Form
…..COMPANY LTD.
Rs. Rs.
To Stock (opening) By Sales
To Purchases By Stock (closing)
To Wages
To Coal and coke
To Carriage inward
To Gross profit c/d
_____ _____
_____ _____
…..Company Ltd.
b. repayment of loans.
a. transfers to reserves
b. the aggregate, if material, of any amounts withdrawn from
such reserves.
If there is any surplus left in the Profit and Loss Appropriation Account as
undistributed, the same has to be carried forward to the next year and must be
shown on the liabilities side of the Balance Sheet under the head, “Reserves
and Surplus”. On the other hand, if the company incurs losses, the Profit and
Loss Account proper will show a debit balance which has to be carried forward
to the next year and must be shown on the assets side of the Balance Sheet
under the head, “Profit and Loss Account”. If, however, there are any un-
committed reserves of the company, the same has to be deducted from such
reserves.