Sub: Accounting Topic:
Formats of Income Statement and Balance Sheet
: In the case of sole proprietary and partnership concerns there are no prescribedforms of the income statement and balance sheet. Their preparation is also desirable but notcompulsory. However, they are generally prepared. In the case of trading concern, a trading accountand in the case of a manufacturing concern, a manufacturing account and a trading account can alsobe prepared. In such a case, the account heading is mentioned as follows: Manufacturing/trading andprofit and loss account.In the case of joint stock companies' preparation of the profit and loss account and balance sheetevery year is compulsory. There is no prescribed form (except in the case of banking and insurancecompanies) of the income statement or profit and loss account. The account is titled as "Profit andloss account"The results of manufacturing and trading activities may; however, be shown separately in theaccount.The profit and loss account is usually prepared in a T shape. In the case of joint stock company, themanufacturing, trading and profit and loss account is prepared in the above format except with threemodifications:I.
The heading given is only "Profit and loss account" for taxation in the profit and loss account;II.
The net profit is shown after making provisions for taxation in the profit and loss account;III.
Figures, for the previous period, if any, have also to be given.
Profit and loss appropriation account:
In the case of joint stock companies, a profit and lossappropriation account is also prepared. It explains as to how the profit earned during the period hasbeen distributed.