FINANCIAL STATEMENTS ACCOUNTS 1 – IPCC CA KIRAN VASANT TRISHA 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 HO What? Money received & spent Purchases & Sales Assets & 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 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 Shareholding Register 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 name

Annual Return Sec 149 All 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 Statements Revised Schedule VI Other Statutory Requirements Accounting Standards (1 to 32) Statements and Guidance Notes issued by the ICAI

Compliance to Accounting Standards Note: 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 VI Applicable since Feb 28, 2011 ◦ General Instructions under Schedule VI 1.Modification in Schedule VI to comply with AS 2.Disclosure requirements 3.Information content in Notes to accounts 4.Rounding off requirements 5.Previous years’ figures 6.Terms used in Financial Statements

1. Modification in Sch VI w.r.t. AS Where 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 requirements The 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 provide a. 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 figures Except for first financial statements Corresponding amounts for the immediately preceding report Including notes on accounts shall also be given

PART I – FORM OF BALANCE SHEET Name of the company Balance sheet as at----- ParticularsNotes No. C.Y.P.Y. EQUITY AND LIABILITIES 1.Shareholders’ funds 2.Share application money pending allotment 3.Non-Current Liabilities 4.Current Liabilities Total ASSETS 1Non-current Assets 2Current Assets Total

I. EQUITY AND LIABILITIES Shareholder's Funds ◦ Share Capital ◦ Reserves and Surplus ◦ Money received against share warrants Share application money pending allotment

I. EQUITY AND LIABILITIES Non-Current Liabilities ◦ Long-term borrowings ◦ Deferred tax liabilities (Net) ◦ Other Long term liabilities ◦ Long term provisions

I. EQUITY AND LIABILITIES 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 SHEET An 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 SHEET A 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% MANAGER 387 PART- TIME 309(4) WITH MD/ WTD 309(3) ONE 5% >ONE 10% 5% WITH MD/WTD 1% NO MD/WTD 3% % OF ELIGIBLE PROFIT

ELIGIBLE PROFITS

MAX REMUNERATION WHEN PROFITS ARE INADEQUATE EFFECTIVE CAPITAL REMUNERATI ON PER MONTH Less than 1 croreRs.75,000 Between 1 & 5 CroresRs.100,000 Between 5 & 25 Crores Rs.125,000 Between 25 & 100 Crores Rs.150, Crores or moreRs.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