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Company Final A/c

Introduction
• As per Sec 2(20) of the Co Act, 2013 ‘company’ means a company incorporated
under this act or any previous co law. The major co laws before enactment of Co
Act,2013 were:
• The Companies Act,1956
• The companies Act, 1913
• The companies Act, 1882
• The companies Act, 1866

• The co act prescribes few provisions under which Financial Statements are to be
prepared and presented. The purpose is to lay before the shareholders adequate
information for enabling them to judge the performance of the company and the
role of the directors during a specified period called “accounting period”.
Annual Accounts
• As per the provisions of sec 129(2) of the CA 2013, at every AGM, the BOD shall
lay before such meeting, financial statements of the year. AGM should take place
within 6 mths from the date of closing of the FY.

• Sec 2(40) of the CA,2013, states that FS in context of a co, includes:


a) B/s
b) P&L a/c
c) CFS
d) Statement of Changes in Equity (if applicable)
e) Explanatory notes
Forms and content of Balance Sheet and P&L A/c
• Sec 211 of the CA,1956 deals with the preparation and presentation of FA of Co.
• It requires that FA are prepared and presented in accordance with schedule VI of
the CA,1956.
• Sch VI is divided into 4 parts:
i. Deals with disclosure of information relating to share capital, liabilities and
assets in the B/s of the co. it suggests two forms of B/s: Horizontal and
Vertical.
ii. Information to be disclosed in the P&L a/c of a co. However, no form of
P&L a/c is prescribed.
iii. Interpretation of certain items.
iv. Disclosure of certain details as part of published information.
Profit and Loss of a co
• Part II of sch VI deals with the preparation of P&L a/c of co. No form has been
prescribed but requires that P&L a/c shall be made to clearly disclose the results
of the working of the co.
Schedule III of The Co Act, 2013
• Owing to certain developments in the past few decades, traditional business habits
and techniques have undergone huge transformation.
• Many non traditional businesses ventured with an altogether different set of assets
and liabilities.
• Sch VI failed to incorporate such contemporary aspects and therefore, CA, 2013
along with different schedules attempts to modernize and simplify the
presentation of final a/c and making it more relevant.
Main Features of Sch III
• This has been prepared as per the existing non converged Indian AS.
• If there is any conflict btw AS and Sch III, regarding treatment of an item or
disclosure, the provisions of AS will prevail.
• The disclosure requirements specified in Part I and Part II of this schedule are in
addition to and in substitution of the disclosure requirements specified in AS.
• Broad and significant items to be presented on the face of FS. Details in the Notes
to A/c.
• It prescribes Vertical format for the presentation of BS.
• It also prescribes Vertical format for the presentation of P&L a/c. However, the
name has been changed to Statement of Profit and Loss.
• Assets and Liabilities are to be classified into: Current and Non Current
• CFS is to be prepared as per AS 3.
Point in respect of Preparation of B/s
• The name of the co is written at the top and date on the next line.
• Both the previous and current year’s figures are to be shown.
• Only main items are to be shown on the face of B/s.
• Notes to a/c are part of FS.
• There is no broad heading for Miscellaneous Expenditure. All those items are to
be adjusted against Reserves and Surplus.
• All assets and liabilities are classified into: Current and Non Current