FINANCIAL STATEMENTS ACCOUNTS 1 – IPCC CA KIRAN VASANT TRISHA CLASSES.

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FINANCIAL STATEMENTSACCOUNTS 1 – IPCCCA KIRAN VASANTTRISHA CLASSES

Maintenance of Books of Accounts (Sec 209)

Where?Regd. Office unless

BOD decide elsewhere

For Branches:Returns of period intervals of not

more than 3 months sent within reasonable time to

What?Money received &

spentPurchases & SalesAssets & Liabilities

Cost records

Proper books not deemed to be kept:Where it does not

give a true and fair view

When accrual system is not

followed

Statutory Books

Register of Mortgages &

Charges

Register of Members & Index

Register of Debenture Holders

& Index

Foreign Register of Members & of

Debenture holders & their Duplicates

Minute Books

Register of Contracts,

Companies and Firms in which the

Directors are interested

Register of Directors,

Managing Director, Manager & Secretary

Register of Director’s

ShareholdingRegister of

Investments in securities of any

other body corporate, loans

made, guarantees

Registers & Documents

relating to the issue of shares

Register Of Investments not held in its own

Annual Return

Sec 149All companies having share

capital

60 days from day of AGM

Annual return containing the particulars in Part I of Sch V

Form as per Part II of Sch V

Final Accounts u/s 210 – for companies carrying on business for profit

Balance sheet

Profit & Loss

Final Accounts u/s 210 – for companies not carrying on business for profit

Balance sheet

Inc & Exp a/c

Prescribed Forms

• Insurance Companies• Banking Companies• Electricity Companies• Such other where the

governing Act prescribes form

Specific Act is

applicable

• Balance Sheet as per Form set out in Part I of Schedule VI or near thereto as circumstances admit

• Profit and Loss Account as per Part II of Schedule VI

No specific Act is

applicable

Points to be borne in mind while preparing Financial StatementsRevised Schedule VIOther Statutory RequirementsAccounting Standards (1 to 32)Statements and Guidance Notes

issued by the ICAI

Compliance to Accounting StandardsNote: Sub-sections 3A, 3B & 3C in

Sec 211 makes it mandatory for companies to comply with AS

Where P&L or BS do not comply, the company shall disclose◦Deviation from the Accounting

Standards◦The reasons for such deviation◦The financial effect due to such

deviation

Revised Schedule VIApplicable since Feb 28, 2011

◦General Instructions under Schedule VI1. Modification in Schedule VI to comply

with AS2. Disclosure requirements3. Information content in Notes to

accounts4. Rounding off requirements5. Previous years’ figures6. Terms used in Financial Statements

1. Modification in Sch VI w.r.t. ASWhere compliance with the

requirements of the Act including AS as applicable to the companies require any change in treatment or disclosure including◦Addition◦Amendment◦Substitution or◦Deletion in the head/sub-head in FS

The requirements of the Schedule VI shall stand modified accordingly

2. Disclosure requirementsThe disclosure requirements specified in Part

I and Part II of this schedule are in addition to and not in substitution of disclosure requirements specified in the AS.

Additional disclosures specified in the AS shall be made in the notes to accounts or by way of additional statement unless required to be disclosed on the face of Financial Statements.

Similarly, all other disclosures as required by the Companies Act shall be made in the notes to accounts in addition to the requirements set out in this schedule.

3. Notes on Accounts

Notes on accounts shall contain additional information and shall providea. Narrative descriptions or

disaggregation of items recognized in those statements

b. Information about items that do not qualify for recognition in those statements

4. Rounding off rules

• The nearest hundreds, thousands, lakhs or millions, or decimals thereof

Turnover is less

than100 Crore

rupees

• To the nearest, lakhs, millions or crores or decimals thereof

Turnover is more than 100 crore

rupees

5. Previous year’s figuresExcept for first financial

statementsCorresponding amounts for the

immediately preceding reportIncluding notes on accounts shall

also be given

PART I – FORM OF BALANCE SHEETName of the companyBalance sheet as at-----

Particulars Notes No.

C.Y. P.Y.

EQUITY AND LIABILITIES

Shareholders’ funds

Share application money pending allotment

Non-Current Liabilities

Current Liabilities

ASSETS

1 Non-current Assets

2 Current Assets

I. EQUITY AND LIABILITIES

Shareholder's Funds ◦Share Capital ◦ Reserves and Surplus◦Money received against share

warrants

Share application money pending allotment

Non-Current Liabilities◦Long-term borrowings ◦Deferred tax liabilities (Net) ◦Other Long term liabilities◦Long term provisions

Current Liabilities ◦ Short-term borrowings◦ Trade payables ◦Other current liabilities◦Short-term provisions

II. Assets Non-current assets :

◦ Fixed assets: Tangible assets Intangible assets Capital work-in-progress Intangible assets under development

◦ Non-current investments◦ Deferred tax assets (net) ◦ Long term loans and advances◦ Other non-current assets

II. Assets

Current assets ◦ Current investments ◦ Inventories ◦ Trade receivables◦ Cash and cash equivalents◦ Short-term loans and advances◦ Other current assets

GENERAL INSTRUCTION FOR PREPARATION OF BALANCE SHEET

An asset shall be classified as current when it satisfies any of the following criteria:◦ It is expected to be realized in or is intended for

sale or consumption in, the company’s normal operating cycle:

◦ It is held primarily for the purpose of being traded:

◦ It is expected to be realized within twelve months after reporting date: or

◦ It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date:

all other assets shall be classified as non-current.

GENERAL INSTRUCTION FOR PREPARATION OF BALANCE SHEETAn operating cycle

◦is the time between the acquisition of asset for processing but 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.

GENERAL INSTRUCTION FOR PREPARATION OF BALANCE SHEET

A liability shall be classified as current when it satisfies any of the following criteria:◦ It is expected to be settled in the company’s

normal operating cycle;◦ It is held primarily for the purpose of being

traded;◦ The company does not have an unconditional

right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification;

All other liabilities shall be classified as non-current.

GENERAL INSTRUCTION FOR PREPARATION OF BALANCE SHEETA receivable shall be classified as a

‘trade receivable’ if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business.

A payable shall be classified as a ‘trade payable’ if it is in respect of the amount due on account of goods purchased or services received in the normal course of business.

MANAGERIAL REMUNERATION

Remuneration for the purpose of Sec 198, 309, 310, 311, & 387, shall include:

Rent free accommodation, any other benefit, amenity in respect thereof;

Any other benefit or amenity provided free of charge or at a concessional rate;

Any obligation or service which would otherwise be occurred by them;

Life Insurance premia for gratuity, pension, annuity on own life or spouse

CEILING ON REMUNERATION

OVERALL CEILING

MAXIMUM 11%

MANAGER387

PART- TIME309(4)

WITH MD/ WTD309(3)

5%WITH

MD/WTD

NO MD/WTD

% OF ELIGIBLE PROFIT

ELIGIBLE PROFITSDEDUCTIONS / DEBITS CREDITS / (INCOME)

* All usual working charges * Bounties and subsidies from Government* Bonus or commission to staff unless expressly disallowed by disburser* Tax on Abnormal profits * Revnue profit from sale of assets* Interest on Debentures and loans* Expenses on repairs* Donations not exceeding 50,000 or 5% of

average profits of last 3 years whicheveris higher

* Depreciation u/s 350 (Sch XIV)

* Income Tax * Securities premium* Any compensation made voluntarily * Profit on sale of forfeited shares* Capital Loss from sale of assets * Capital profits

MAX REMUNERATION WHEN PROFITS ARE INADEQUATE

EFFECTIVE CAPITAL

REMUNERATION PER MONTH

Less than 1 crore Rs.75,000

Between 1 & 5 Crores

Rs.100,000

Rs.125,000

Rs.150,000

100 Crores or more

Rs.200,000

EFFECTIVE CAPITAL

PAID UP CAPITAL (Not application money or advance against shares)

SECURITIES PREMIUM

RESERVES AND SURPLUS (Not revaluation reserve)

Long term Loans

Less: Investments, Losses, Prelim Exp. Etc not yet written off