FINAL ACCOUNTS OF COMPANIES

MEANING OF COMPANY
4.2
As per Section 2(20) of the Companies Act, 2013, “Company” means a company
incorporated under the Companies Act, 2013 or under any previous company law
(e.g., the Companies Act, 1956). Different types of companies have been defined
(under various sub-sections of the Companies Act, 2013) as follows:

As per Section 128 of the Companies Act, 2013

Every company should prepare and keep

at its registered office

books of account and other relevant books and

financial statements
accrual basis and according to double entry system of
accounting.

for every financial year

giving a true and fair view of the state of the affairs

ANNUAL RETURN
In accordance with Section 92 of the Companies Act, 2013, every company should
prepare an annual return in the form prescribed by the Companies Act, 2013 signed
by a director and the company secretary, or where there is no company secretary,
by a company secretary in practice:

Provided that in relation to One Person Company and small company, the annual
return should be signed by the company secretary, or where there is no company
secretary, by the director of the company.

The annual return should be filed with the Registrar within 60 days from the day on
which each of the annual general meeting (AGM) is held or where no AGM is held
in any year, within 60 days from the date on which AGM should have been held
along with a statement showing the reasons why AGM was not held.

1
FINAL ACCOUNTS
Under Section 129 of the Companies Act, 2013, at the annual general meeting of a
company, the Board of Directors of the company should lay financial statements
before the company:

Financial Statements as per Section 2(40) of the Companies Act, 2013, inter-alia
include -

(i) a balance sheet as at the end of the financial year;

(ii) a profit and loss account, or in the case of a company carrying on any activity
not for profit, an income and expenditure account for the financial year;

(iii) cash flow statement for the financial year;

(iv) a statement of changes in equity, if applicable; and

(v) any explanatory note annexed to, or forming part of, any document referred
to in (i) to (iv) above:

Provided that the financial statement, with respect to One Person Company, small
company and dormant company, may not include the cash flow statement.

Statement of
Profit and loss

Statement of Cash Flow

changes in Statement
Equity (if
applicable) Financial
statements

Notes and
Balance sheet other
statements

2
As per the Amendment, under Chapter I, clause (40) of section 2, an exemption has
been provided vide Notification dated 13th June, 2017 under Section 462 of the
Companies Act 2013 to a startup private company besides one person company,
small company and dormant company. As per the amendment, a startup private
company is not required to include the cash flow statement in the financial
statements.
Thus, the financial statements, with respect to one person company, small
company, dormant company and private company (if such a private company is a
start-up), may not include the cash flow statement.
Periodic Financial Statements
The Central Government may, require such class or classes of unlisted companies,
as may be prescribed,—
(a) to prepare the financial results of the company on such periodical basis and
in such form as may be prescribed;
(b) to obtain approval of the Board of Directors and complete audit or limited
review of such periodical financial results in such manner as may be prescribed; and
(c) file a copy with the Registrar within a period of thirty days of completion of
the relevant period with such fees as may be prescribed.
Points to be kept in mind while preparing final accounts:
♦ Requirements of Schedule III to the Companies Act;
♦ Other statutory requirements;
♦ Accounting Standards notified by Ministry of Corporate Affairs (MCA) (AS 1
to AS 29 2);
♦ Statements and Guidance Notes issued by the Institute of Chartered
Accountants of India (ICAI); which are necessary for understanding the
accounting treatment/ valuation/ disclosure suggested by the ICAI.

Requirements of
Schedule III to
the Companies
Act, 2013

Financial
statements

Accounting
Other
Standards
statutory
notified by
requirements
MCA
3
 COMPONENTS OF FINANCIAL STATEMENTS
2.4
A complete set of financial statements normally consists of a Balance Sheet, a
Statement of Profit and Loss and a Cash Flow Statement together with notes, other
statements and explanatory materials that form an integral part of the financial
statements.
All components of the financial statements are interrelated because they reflect
different aspects of same transactions or other events. Although each statement
provides information that is different from each other, none in isolation is likely to
serve any single purpose nor can anyone provide all information needed by a user.
The major information contents of different components of financial statements
are explained as below:
Balance Sheet portrays value of economic resources controlled by an enterprise.
It also provides information about liquidity and solvency of an enterprise which is
useful in predicting the ability of the enterprise to meet its financial commitments
as they fall due.
Statement of Profit and Loss presents the result of operations of an enterprise
for an accounting period, i.e., it depicts the performance of an enterprise, in
particular its profitability.
Cash Flow Statement shows the way an enterprise has generated cash and the
way they have been used in an accounting period and helps in evaluating the
investing, financing and operating activities during the reporting period.
Notes and other statements present supplementary information explaining
different items of financial statements. For example, they may contain additional
information that is relevant to the needs of users about the items in the balance
sheet and statement of profit and loss. They include various other disclosures such
as disclosure of accounting policies, segment reporting, related party disclosures,
earnings per share, etc.

OBJECTIVES AND USERS OF FINANCIAL STATEMENTS

The objective of financial statements is to provide information about the financial
position, performance and cash flows of an enterprise that is useful to a wide range
of users in making economic decisions.
The framework identifies seven broad groups of users of financial statements.

Users of Financial Statements

Suppliers
Investors Employees Lenders and Customers Govt. Public
Creditors

4
FUNDAMENTAL ACCOUNTING ASSUMPTIONS
As per the framework, there are three fundamental accounting assumptions:

Fundamental Accounting
Assumptions

Going concern Accrual Consistency

QUALITATIVE CHARACTERISTICS OF
FINANCIAL STATEMENTS
The qualitative characteristics are attributes that improve the usefulness of
information provided in financial statements. The framework suggests that the
financial statements should observe and maintain the following four qualitative
characteristics as far as possible within limits of reasonable cost/ benefit.

Qualitative Characteristics of Financial

Statements

Understandability Relevance Comparability Reliability

5
Format
SCHEDULE III TO THE COMPANIES ACT 2013
PART I – BALANCE SHEET
Name of the Company…………………….
Balance Sheet as at ………………………
Figures as at the Figures as at the
Note
PARTICULARS end of current end of previous
No.
Reporting period reporting period
A. EQUITY AND LIABILITIES
1. Shareholder's funds
a Share capital
b Reserves and surplus
c Money received against share warrants
2. Share application money pending allotment
3. Non-Current Liabilities
a Long-term borrowings
b Deferred tax liabilities (Net)
c Other long term liabilities
d Long-term provisions
4. Current Liabilities
a Short-term borrowings
b Trade payables
c Other current liabilities
d Short-term provisions
TOTAL
B. ASSETS
1. Non-Current Assets
a Property,Plant & Equipment
i. Tangible assets
ii. Intangible assets
iii. Capital work-in-Progress
iv. Intangible assets under development
b Non-current investments
c Deferred tax assets (net)
d Long-term loans and advances
e Other non-current assets
2. Current Assets
a Current investments
b Inventories
c Trade receivables
d Cash and cash equivalents
e Short-term loans and advances
f Other current assets
TOTAL

OPERATING CYCLE:
It is the time between the acquisition of assets for processing and their realization in cash or cash
equivalents. Where the normal operating cycle cannot be identified, it is assumed to have a duration of
12 months.

6
CONTINGENT LIABILITIES and COMMITMENTS (to the extent not provided for)
a. Claims against the company not acknowledged as debt
b. Guarantees
c. Arrears of fixed cumulative dividends on preference shares
d. Estimated amount of contracts remaining to be executed on capital account and not provided for
e. Uncalled liability on shares and other investments partly paid
f. Bills discounted not yet matured
g. Other money for which the company is contingently liable & other commitments.

PART II – STATEMENT OF PROFIT AND LOSS

Name of the Company…………………….
Profit and loss statement for the year ended ………………………
Figures as at the Figures as at the
Note
PARTICULARS end of current end of previous
No.
Reporting period reporting period
I. Revenue from operations
II. Other income
III. Total Revenue (I + II)
IV. Expenses:
Cost of materials consumed
Purchases of Stock-in-Trade
Changes in inventories of finished goods, work-in-
progress and Stock-in-Trade
Employee benefits expense
Finance costs
Depreciation and amortization expense
Other expenses
Total Expenses
V. Profit before exceptional and extraordinary
items and tax (III-IV)
VI. Exceptional items
VII. Profit before extraordinary items and tax (V - VI)
VIII. Extraordinary Items
IX. Profit before tax (VII- VIII)
X Tax expense:
(1) Current tax
(2) Deferred tax
XI. Profit (Loss) for the period from continuing
operations (VII-VIII)
XII. Profit/(loss) from discontinuing operations
XIII. Tax expense of discontinuing operations
XIV. Profit/(loss) from Discontinuing operations (after
tax) (XII-XIII)
XV Profit (Loss) for the period (XI + XIV)
XVI. Earnings per equity share:
(1) Basic
(2) Diluted
Note: Any item of income or expenditure which exceeds 1% of the revenue from operations or Rs.
1,00,000 whichever is higher to be separately disclosed.

7
Note 1 : Share Capital

Notes :

Note 2 : Reserves and Surplus

(a) Capital Reserves XX
(b) Capital Redemption Reserve XX
(c) Securities Premium Reserve XX
(d) Debenture Redemption Reserve XX
(e) Revaluation Reserve XX
(f) Other Reserve XX
(g) Surplus (Profit & Loss A/c)
Surplus as at the beginning of the year XX
Add : Profit / (Loss) for the period XX
Less : Proposed Dividend (Last Year) XX
Less : Transfer to Reserves (XX)
Add : Transfer from Reserves XX XX
XX

Note 3 : Long term borrowings

Debentures
Bank Loan
Loan form Financial institute
Bonds
Loan from Directors
Public Deposit etc.
Premium on Redemption

8
Note 4 : Long Term Provisions
Provision for Gratuity
Provision for Provident fund
Provision for Pension
Note 5 : Short term borrowings
Bank O/D
Cash Credit
Loans payable on demand.
(Security information also needs to be disclosed)
Note 6 : Other Current Liabilities
Creditors
Bills Payable
O/s expenses
Call in advance
Advance from customers
Unclaimed dividend
TDS on expenses
Income Tax Payable etc.

Note 7 : Short term provisions

Provision for Tax
Provision for Employees Benefits
Note 8 : Property, Plant & Equipments
Land & Building
Furniture & fixtures
Motor Car
Plant & machinery
Office equipments etc.
(Tangible assets shall be disclosed at cost)
Note 9 : Intangible Assets
Goodwill
Patent
Copy Rights
Trade mark
Computer Software etc
(Intangible assets shall be disclosed at cost)
Note 10 : Non - Current Investments
Investment in shares
Bonds
Government securities
Property
Gold etc
(Market values of investment should disclose separately.)

9
Note 11 : Long term Loan and Advances
Loan to subsidiaries
Related parties
Housing loan to employees
Security deposit
Deposit with government Authorities
Telephone deposit
Note 12 : Inventories
Closing stock of RM
WIP
Finished goods
Stock in trade
Loose tools
Stores and squares parts
Tools and dies
Goods in transit etc.
Note 13 : Trade Recievables
Bills Receivable
Sundrydebtors xx
O/s for more than 6 months xx
Other debts xx xx
Less: Provision for BD / RDD (xx)
Note 14 : Cash & Cash equivalents
Cash in hand & Cash at Bank
Marketable Securities
Note 15 : Short term loans & Advances
Advances to staff
Prepaid expenses
Advance Tax
TDS on Income
Income Tax Refund etc.
Note 16 : Other Current Assets
Income receivable
Miscellaneous Expenditure item
Note 17 : Contingent Liabilities and Commitments
Contingent liabilities-
Claims against company not acknowledge as Debt
Bill discounted but not mature
Guarantee given by the company
Commitments-
Un called amount on partly paid shares held as Investments
Capital Expenditure Commitments

10
Note 18 : Other Incomes
Rent
Dividend
Commission
Note 19 : Change in Inventory of FG, WIP & Stock in trade
Opening stock
Closing stock
Note 20 : Employee Benefit cost
Salary
Wages
Bonus
Commission
Allowances
Staff welfare expenses
Note 21 : Finance Cost
Interest on all Borrowing
Miscellaneous expense w/off during the year
Note 22 : Other Expenses
Administration expenses
Selling & distribution expenses
Bad debts
Auditors for remuneration-Audit fees + Taxation work +
Company law matter + Consultancy + other matters +
Reimbursement of employee
Miscellaneous expense w/off during the year
Note 23 : Exceptional Items
Profit/ Loss on sales of FA
Investment
Note 24 : Extra Ordinary Items
Loss due to earthquake other natural calamity items.

11
 Operating Cycle
The term Operating Cycle is defined in Schedule III of the Companies Act, 2013 as follows:

"Operating Cycle is the time between the acquisition of an asset for processing and its realisation into Cash
and Cash Equivalents.”

Where operating cycle cannot be identified, it is assumed to be of 12 months.

The effect of Operating Cycle is that in case Operating Cycle is of a period of more than 12 months (say 18
months) all liabilities of that business are classified or shown as Current Liability if they are due for settlement
within 18 months from the date of Balance Sheet. Let us understand the period of Operating Cycle with the
help of following diagram:

Operating Cycle is of 13 Months (3 Months + 4 Months + 2 Months + 4 Months)

Operating Cycle is determined for each class of business separately. Thus, if a company has more than one
business (say construction and trading), Operating Cycle will be determined for construction business and
trading business separately.

12
Amount Due to be Settled within 12 Months from the Date of Balance Sheet:

A liability is classified or shown as current liability, if it is due for settlement (i.e., payable) within 12 months of
the date of Balance Sheet. Thus,

 When Period of Operating Cycle is less than 12 Months:

Liabilities due for settlement (payment) within 12 months from the date of Balance Sheet are classified
(shown) as current liabilities.

 When Period of Operating Cycle is more than 12 Months (Say 15 Months):

Liabilities due for settlement (payment) within 15 months from the date of Balance Sheet are classified
(shown) as current liabilities.

For example, if a business has an Operating Cycle of 7 months and a liability is due to be settled in 10 months,
the liability will be classified or shown as current liability because the period of 10 months, although is more
than 7 months (Operating Cycle), it is less than 12 months.

Classify the liabilities (Trade Payables) given below as Non-current Liabilities and Current Liabilities
giving reasons for such classification:

Expected Period
Operating Cycle of Payment

(In Months) (In Months)

(i) Trade Payables 10 8

(ii) Trade Payables 10 12

(iii) Trade Payables 10 15

(iv) Trade Payables 18 15

(v) Trade Payables 18 24

13
Solution: STATEMENT SHOWING CLASSIFICATION OF LIABILITIES (TRADE PAYABLES)

Case As Current Liabilities Reason

Or

Non-current Liabilities

(i) Current Liabilities Expected Payment Period

— is less than the period of Operating Cycle, and

— is within 12 months from the date of Balance Sheet.

(ii) Current Liabilities Expected Payment Period is 12 months which is equal to a period of 12
months (Second condition) from the date of Balance Sheet although it is
more than the period of the Operating Cycle.

(iii) Non-current Liabilities Expected Payment period is more than the period of Operating Cycle and
after 12 months from the date of Balance Sheet.

(iv) Current Liabilities Expected Payment period is less than the period of Operating Cycle although
it is payable after 12 months from the date of Balance Sheet.

(v) Non-current Liabilities Expected Payment period is more than the period of Operating Cycle and
after 12 months from the date of Balance Sheet.

14
Classify the following Assets (Trade Receivables) into non-current assets and current assets and give
reasons for such classification:

Case Particulars Operating Cycle (In Months) Expected Realisation Period (in Months)

(i) Trade Receivables 11 10

(ii) Trade Receivables 11 12

(iii) Trade Receivables 11 15

(iv) Trade Receivables 20 15

(v) Trade Receivables 20 24

Solution: STATEMENT SHOWING CLASSIFICATION OF ASSETS (TRADE RECEIVABLES)

Case CA or NCA Reason

(i) Current Assets Expected Realisation Period

— is less than the Operating Cycle Period, and

— is within 12 months from the date of Balance Sheet.

(ii) Current Assets Expected Realisation Period is 12 months which is equal to a period of
12 months (Third Condition) from the date of Balance Sheet although it
is more than the Operating Cycle period.

(iii) Non-current Assets Expected Realisaton Period is more than the Operating Cycle period
and also exceeds the period of 12 months from the date of Balance
Sheet.

(iv) Current Assets Expected Realisation period is less than the Operating Cycle period
although it is more than the period of 12 months from the date of
Balance Sheet.

Expected Realisation period is more than the Operating Cycle period

(v) Non-current Assets and also exceeds the period of 12 months from the date of B/S.

15
TEST YOUR KNOWLEDGE
MCQs
1. Trade payables as per Schedule III will include:
(a) Dues payable in respect to statutory obligation
(b) Interest accrued on trade payables
(c) Bills payables.
2. Securities Premium Account is shown on the liabilities side in the Balance
Sheet under the heading:
(a) Reserves and Surplus.
(b) Current Liabilities.
(c) Share Capital.
3. “Fixed assets held for sale” will be classified in the company’s balance sheet as
(a) Current asset
(b) Non-current asset
(c) Capital work- in- progress

4. Current maturities of long term debt will come under

(a) Current Liabilities.
(b) Short term borrowings.
(c) Long term borrowings.

5. Which of the following is not a current liability as per Schedule III?

(a) Bank overdraft
(b) Net deferred tax liability
(c) Dividend declared.
6. As per the Schedule III, separate disclosure is required for an item of income
or expenditure which exceeds:
(a) % of Revenue from operations or ` 1,00,000 whichever is lower
(b) 1% of Revenue or ` 5,000
(c) 1% of Revenue from operations or ` 1,00,000 whichever is higher.
7. Few friends created a start-up and formed private company for production
and marketing of product. At the end of financial year, their company is not
required to prepare:
(a) Cash flow statement
(b) Balance Sheet and Profit & Loss Account
(c) Notes to Accounts. 16
Problem 1 :
State the major heads under Assets part of the Company’s Balance Sheet.
Problem 2 :
State the major heads under Equity and Liabilities part of the Company’s Balance Sheet.
Problem 3 :
Name the sub-heads under ‘Shareholders’ Funds’.
Problem 4 :
Name the sub-heads under the head ‘Non-Current Liabilities’ in the Equity and Liabilities part of the
Balance Sheet as per Schedule III of the Companies Act, 2013.
Problem 5 :
Name the sub-heads under the head ‘Current Liabilities’ in the Equity and Liabilities part of the Balance
Sheet as per Schedule III of the Companies Act, 2013.
Problem 6 :
Name any five items that are shown under Reserves and Surplus.
Problem 7 :
Name any four items that are shown under Long-term Borrowings.
Problem 8 :
Name any five items that are shown under Other Current Liabilities.
Problem 9.
Under which main head and sub-head of Equity and Liabilities following items in a company’s Balance
Sheet are shown?
(i) Debentures, (ii) Public Deposits,
(iii) Securities Premium Reserves, (iv) Capital Reserves,
(v) Forfeited Shares Account, (vi) Interest Accrued and due on Debentures,
(vii) Bills Payable, (viii) Advances Received from Customers,
(ix) Sundry Creditors, and (x) Premium on Redemption of Debentures.
Problem 10.
Under which main heads and sub-heads of Equity and Liabilities following items are shown while preparing
Balance Sheet of a Company as per Schedule III of the Companies Act, 2013?
(i) Unclaimed Dividend,(ii) Calls-in Arrears, (iii) Calls-in-Advance, (iv) Interest Accrued but not due on
Debentures, and(v) Arrears of Fixed Cumulative Preference Dividends.
Problem 11.
Under which main heads and sub-heads of Equity and Libilities part of the Balance Sheet following item are
shown?

i. Bank Overdraft,
ii. Interest Accrued and due on Unsecured Loans,
iii. Debentures Redemption Reserve,
iv. Capital Redemption Reserve,
v. Advances from Customers (Long-term).

17
Problem 12.
Give major heads and sub-heads under which following items are shown in a company’s Balance Sheet as
per Schedule III of the Companies Act, 2013:
(i) Trade Payables,
(ii) Provision for Tax,
(iii) Proposed Dividend,
(iv) Surplus, i.e., Balance in Statement of Profit and Loss (Dr.), and
(v) Surplus, i.e., Balance in Statement of Profit and Loss.
Problem 13.
How are the following two items shown in a company’s Balance Sheet as at 31st March, 2019 as per
Schedule III of the Companies Act, 2013?
General Reserve (Since 31st March, 2018) Rs 3,00,000; Surplus, i.e., Balance of Profit and Loss (Debit) for
2018-19 Rs 2,00,000.
Problem 14.
How are the following two items shown in a company’s Balance Sheet as at 31st March, 2019?
General Reserves (since 31st March, 2018) Rs 4,50,000; Surplus, i.e., Balance in Statement of Profit and
Loss (Debit) for 2018-19 Rs 6,00,000.
Problem 15.
Classify the following Assets into Non-Current Assets and Current Assets and give reasons for such
classification:
(i) A company has an Operating Cycle of 11 months and the expected period of realization
Of Trade Receivables is 10 months.
(ii) A company has an Operating Cycle of 11 months and the expected period of realization
Of Trade Receivables is 12 months.
(iii) A company has an Operating Cycle of 11 months and the expected period of realization
Of Trade Receivables is 15 months.
(iv) A company has an Operating Cycle of 20 months and the expected period of realization
Of Trade Receivables is 15 months.
(v) A company has an Operating Cycle of 20 months and the expected period of realization
Of Trade Receivables is 24 months.
Problem 16 .
State the major heads under which the items appearing on the Assets part of the company’s
Balance Sheet are classified.
Problem 17 .
Name the sub-heads under the head ‘Non-Current Assets’ in the Assets part of the Balance Sheet as per
Schedule III of the Companies Act, 2013.
Problem 18 .
Name the sub-heads under the head ‘Fixed Assets’ in the Assets part of the Balance Sheet as per Schedule
111 of the Companies Act, 2013.

18
Problem 19 .
Name the sub-heads under the head ‘Current Assets’ in the Assets part of the Balance Sheet as per
Schedule III of the Companies Act, 2013.
Problem 20 .
Name any five items of Tangible Assets.
Problem 21 .
Name any five items of Intangible Assets.
Problem 22 .
List five items which are included under the head ‘Non-Current Investment.’
Problem 23 .
List five items that are included under Inventories.
Problem 24 .
List five items that are included under Current Investments.
Problem 25 .
Rearrange the following items under assets according to Schedule III of the Companies Act, 2013:
(i) Office Equipment, (ii) Loose Tools, (iii) Goodwill,
(iv) Trademarks, (v) Bills Receivables, (vi) Debtors,
(vii) Land, (viii) Building, (ix) Stock-in-Trade,
(x) Stores and Spare Parts, (xi) Furniture, (xii) Vehicles,
(xiii) Advance to Subsidiaries, (xiv) Cash at Bank, (xv) Cash in Hand,
(xvi) Work-in-Progress (Machinery), (xvii) Plant,
(xviii) Interest Accrued on Investments, and
(xix) Deposits with Electricity Supply Company.
Problem 26.
Under which Main heads and Sub-heads will the following items appear in the Balance Sheet of a Company
as per Schedule III of the Companies Act, 2013?
(i) Bills Receivable (ii) Interest Accrued and Due on Debentures
(iii) Trade Creditors (iv) Provision for Taxatio
(v) Stores and Spares
Problem 27.
Give the Main-heads and Sub0heads under which following items are shown in a company’s
Balance Sheet as per Schedule III, Part I of the Companies Act, 2013:
(i) Mortgage Loan, (ii) Patents,
(iii) Investments, (iv) General Reserve,
(v) Mining Rights, (vi) 10% Debentures,
(vii) Licences and Franchises, (viii) Premium on Redemption of Debentures,
(ix) Capital Advances, and (x) Brands.

19
Problem 28.
Under which heads and sub-heads will the following items appear in the Balance Sheet of a Company as
per Schedule III of the Companies Act, 2013?
(i) Public Deposits (ii) Calls-in-Advance
(iii) Building under Construction.
Problem 29.
Under which Main heads and Sub-heads of Assets part following items are shown in the Balance Sheet of a
limited Company as per Schedule III of the Companies Act, 2013?
(i) Goodwill, (ii) Sundry Debtors,
(iii) Long-term Investments, (iv) Share of Reliance Ltd.,
(v) Prepaid Insurance, (vi) Deposit for Electricity,
(vii) Building, (viii) Investment in Land and Building,
(ix) Mining Rights, and (x) Computer Software.
Problem 30.
How are the following items shown in the Balance Sheet of Construction Rasa Ltd. as at 31st March, 2019?
(i) Total Depreciation to date as at 1st April, 2018, Rs 10,00,000.
(ii) Written Down Value of Plant and Machinery as at 1st April, 2018, Rs 22,50,00.
(iii) Depreciation to be written off at 25% p.a., on written down value.
Problem 31.
Palms Ltd. was formed on 1st November, 2015, with a Capital Rs 12,00,000 divided into Equity Shares of Rs
10 each at a premium of Rs 2 per share. It offered 1,00,000 shares to the public.
The issue price was payable as follows:
Rs 4 with application,
Rs 6 with allotment (including premium), and
The balance as and when required.
The balance was not called till the date of the Balance Sheet.
All the shares offered by the company were subscribed for. One shareholder holding 1,000 shares paid the
balance with allotment.
Another shareholder holding 800 shares did not pay the allotment money when due.
You are required to show the items under Equity and Liabilities in the Balance Sheet of the Company
(prepared as per Schedule III of the Companies Act, 2013) at the end of the financial year with Notes to
Accounts.

20
Problem 32.
Pinnacle Instruments Ltd. registered itself with a capital of Rs 20,00,000 divided into Equity Shares of Rs
100 each.
In 1st June, 2014, the company issued 5,000 Equity Shares as fully paid to Mila Herbals, as purchase
consideration for the purchase of Plant and Machinery.
The remaining shares were issued to public at par.
Till the date of the Balance Sheet, the Directors had called from the public, 60% of the nominal value of the
shares.
The amount called was received by the company.
You are required to prepare as at 31st March, 2015:
(i) The Balance Sheet of Pinnacle Instruments Ltd. as per Schedule III of the Companies Act, 2013.
(ii) Notes to Accounts.
Problem 33.
Newtown Ltd. was formed on 1st April, 2012, with an authorized capital of Rs 10,00,000 divided into equity
shares of Rs 10 each. It invited applications for 20,000 shares in the year of its formation, all of which were
subscribed for and amount due on them fully received.
On 1st April, 2013, the company invited applications for another 50,000 shares. Applications for 45,000
shares were received. All calls were made and the amount received on them except the final call of Rs 2
per share on 1,000 shares.
Out of the shares on which final call was not received, 600 were forfeited.
In 1st April, 2013, the company also issued 2,000, 6% Debentures of Rs 100 each at a discount of 4%
redeemable at a premium of 5% in four equal annual installments beginning from the second year of the
issue.
The company had a balance of Rs 1,00,000 in its General Reserve on 31st March, 2014.
You are required to show the items under the heading Equity and Liabilities in the Balance Sheet of the
company as on 31st March, 2014 as per Schedule III of the Companies Act, 2013 showing clearly Notes to
Accounts. Ignore interest on debentures.
Problem 34.
Place the following in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013:
Rs
Share Capital (50,000 Equity Shares of Rs 10 each)……………………………………………..5,00,000
(Out of the above, 10,000 Equity Shares were issued to a Vendor of computers)
Surplus, i.e., Balance in Statement of Profit and Loss………………………………………….(1,40,000)
10% Debentures……………………………………………………………………………………………………1,90,000
Stock-in-Trade (Inventory)………………………………………………………………………………………..40,000
Computers……………………………………………………………………………………………………………..1,00,000
Goodwill……………………………………………………………………………………………………………………20,000
Provision for Tax……………………………………………………………………………………………………….60,000
Totaling of Balance sheet is bot required.

21
Problem 35.
Following balances have been extracted from the books of Vijay Ltd. as at 31st March, 2019: Equity Share
Capital (fully paid-up shares of Rs 10 each) Rs 8,00,000; General Reserve Rs 2,00,000; Bank Loan Rs
4,00,000; 8% Debentures Rs 5,00,000; Debentures Suspense Account Rs 5,00,000 (Issued as Collateral
Security); Creditors Rs 80,000; Bills Payable Rs 20,000; Statement of Profit and Loss (Dr.) Rs 30,000;
Building Rs 10,00,000 and Government Bonds Rs 2,00,000;
Stock Rs 2,50,000.
Proposed Divided for the year ended 31st March, 2019—Rs 80,000.
There is a contingent liability for a claim of Rs 10,000 against the company not acknowledged as debt.
You are required to prepare the necessary Notes to Accounts from the above.
Problem 36.
From the given Trial Balance, prepare the Balance Sheet of Moonlight Limited as at 31st March, 2014:
Particulars Dr.(Rs) Cr.(Rs)
Share Capital (40,000 Equity Shares of Rs 10 each) … 4,00,000
Bills Receivable 90,000 …
16% Mortgage Loan … 1,70,000
Stores and Spares 1,15,000 …
Debtors 1,66,000 …
Plant and Machinery 2,90,000 …
Goodwill 40,000 …
Provision for Tax … 26,000
General Reserve … 1,30,000
Cash in Hand 18,000 …
Calls-in-Arrears 2,000 …
Marketable Securities 5,000 …
7.26.000 7,26,000

Problem 37.
Following balance have been extracted from the books of Universe Ltd. as at 31st March, 2016:
Particulars Rs
Equity Share Capital (Fully paid shares of Rs 100 each) 4,00,000
Unclaimed Dividend 10,000
Bank Balance 40,000
Security Premium Reserve 75,000
Statement of Profit and Loss (Dr.) 50,000
Tangible of Fixed Assets (at cost) 3,50,000
Accumulated Depreciation till date 25,000
Trade Marks 70,000
st
You are required to prepare as at 31 March, 2016:
(i) The Balance Sheet of Universe Ltd. as per Schedule III of the Companies Act, 2013.
(ii) Notes to Accounts.

22
Problem 38.
The following balances have been extracted from the books of Vanity Ltd. as at 31st March, 2017:
TRIAL BALANCE
as at 31st March, 2017
Particulars Dr.(Rs) Cr.(Rs)
Equity Share Capital (5,000 Shares of Rs 100 each fully paid) … 5,00,000
Fixed Assets 7,30,000 …
Reserves and Surplus … 2,00,000
Inventories 50,000 …
Cash and Bank Balances 1,58,000 …
Creditors … 40,000
Bills Payable … 20,000
Underwriting Commission on issue of Shares 10,000 …
st
5% Debentures (1/5 of the Debentures to be redeemed on 31 March, 2018 … 2,00,000
Interest Accrued and due on 5% Debentures … 8,000
Trade Receivables 20,000 …
Total 9,68,000 9,68,000

*The question is modified in view of changed AS-5, Contingencies and Events Occurring after the Balance
Sheet Date to Dividend paid.
You are required to prepare as at 31st March, 2017:
(i) The Balance Sheet of Vanity Ltd. as per Schedule III of the Companies Act, 2013.
(ii) Notes to Accounts.
Problem 39.
Ajmera Ltd raised the following loans in the year 2016-17:
12% Bank Loan from SBI on 1st April, 2016: Rs 15,00,000
10,000; 10% Debentures of Rs 100 each, redeemable at par
in 4 equal yearly installments, on 1st October, 2016: Rs 10,00,000
The items of the loans were:
(i) The redemption of Debentures to begin from 30th September, 2017.
(ii) Interest on the Bank Loan to be paid annually but interest on Debentures to be paid half-yearly.
The company had not paid the interest, both on the Bank Loan and on the Debentures, till the Balance
Sheet date.
You are required to show the above items under Equity and Liabilities of the Balance Sheet of the company
as at 31st March, 2017.

23