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Q: What are financial statements or what are the various statement included with final account /
financial statement of companies as per Companies Act of 2013 [Sec.2(40)].
A: Financial statement provide information about the profitability or performance and financial
position of the business.
As per Company’s Act of 2013 [Sec.2 (40)]. Financial statement included the following:
1. Balance sheet.
2. Statement of Profit & Loss account or income statement (non-profit motive).
3. Cash flow statement
4. Statement of Change in Equity (capital)
5. Explanatory notes to accounts
Maintenance of books of accounts/records as per Sec.128:
The books and records are maintained in registrar office along with branch records.
Sec.129: If the directors of the company wants to maintain the books of account / records /
returns in their offices, in such case the board of director have to inform their decision to the the
Register within 7 days of their decision.
Sec.133 : While preparing the final statement of account, it is mandatory to compile with all the
standard notified by the central government and placing the financial statement before AGM for
requisites
The prescribed format as per schedule III Part I and Part II of Companies Act. 2013 is not
applicable to the following:
1) Banking companies (followed as per Banking Act.)
2) Insurance companies. (as per insurance act.)
3) Electricity companies (as per their act.
4) Specific companies followed different act applicable.
Financial statement of Profit & Loss Schedule III of part 2 of Companies Act of 2013
(Format):
Particulars Notes Amount Amount Amount of
previous
year
Income from operation
(sales – returns)
Other income
Income total
Expenses
Cost of material consumed
(opening stock of raw material
+ purchase = closing stock of
raw material)
Purchase for stock in trade
Changes in inventory of
finished good/w.i.p
Employees benefits expenses
Financial cost / expenses
Depreciation and amortization
Other expenses
Profit before exceptional and
extraordinary items
+
-
Profit (profit of normal business
before tax)
Less tax
Profit after tax
Profit from discontinued
operation (+ or -)
Total profit
Basic earnings per share (EPS)
Diluted EPS
Problems:
From the following figures prepare statement of profit & loss for the year ended 31 st March
2018:
Particulars Amount Particulars Amount
Discount allowed 3,500 Misc. income 9,760
Discount received 4,200 Return inward 15,000
Stock as on (1.4.2017) 1,45,000 Sundry expenses 13,880
Wages paid 52,200 Rent paid 60,000
Salaries 2,23,800 Interest on loan 14,800
Advertisements 12,500 Sales 45,80,000
Bad debts 3,850 Purchases 27,85,800
Audit fees 12,000 Carriage inwards 20,300
Debtors 5,00,000 Carriage on sales 12,000
Creditors 3,50,000 Return outwards 10,000
Additional information:
1. Stock on 31.3.2018 is Rs.2,13,840 (net realizable value being Rs.2,25,580),
2. Provision for doubtful debts is to be maintained at 1% of debts.
3. Provision for discount on creditors is required at 0.5%.
4. Outstanding salaries Rs.12,200.
5. Rent outstanding for 2 months.
6. Wages prepaid Rs.2,200.
7. Provide for tax at 40%.
8. No. of equity shares of the company since 1.4.2017 is Rs.40,000.
Solution:
Statement of P & L Account for the year ending 31st March 2018 (part II, Schedule III of
Companies Act 2013:
Particulars Note Amount Amount
Income from operation 45,65,000
Other income 15,710
Income total 45,80,710
Expenses
Purchases (27,85,800 – 10,000) 27,75,800
Changes in inventory (1,45,000 – (68,840)
2,13,840)
Employees benefit 2,86,000
Finance cost 14,800
Other expenses 1,55,030 31,62,790
Profit before exceptional / extraordinary -
expenses
Profit (normal business operation) 14,17,920
before tax
Less tax 5,67,168
Profit after tax 8,50,752
Add/less Profit from discontinued --
operation
Total Profit 8,50,752
B) Calculation of basic earnings per share:
Total profit – preference dividend / No, of equity shares = 8,50,752 / 40,000 = 21.26
Provision for taxation / advance income tax /TDS:
Provision for taxation: Provision for taxation represent amount of taxation liability which is yet
to be assured. Generally income tax return for above amount represent provision of tax.
Amount of income tax paid against such provision is called advance tax, where advance tax is
paid in installments prescribed by income tax authorities as per the mention due dates and not
paid in lump sum amount in financial year,
Whenever assessment is completed provision for taxation becomes real liability and necessary
adjustment are journalized.
Journal Entries:
1. For payment of advance tax:
Advance tax a/c.
To bank
2. For creation of provision of tax:
Profit & Loss a/c.
To provision for taxation
3. Upon computation of assessment:
a. T/F provision to income tax a/c.
To income tax a/c.