The financial statements are the end products of accounting process. They are prepared following accounting policies consistently, accounting standards, Companies Act, 2013 and accounting concepts, principles, procedures and also the legal environment in which the business organisations operate.
These refer to:
To provide information about economic resources and obligations of a business,
To provide information about the earning capacity of the business,
To provide information about cash flows
To judge effectiveness of management
To provide Information about activities of business affecting the society
Disclosing accounting policies
There are various users of the financial statement analysis. They include:
Financial Statements are useful for the following reasons:
The balance sheet shows an entity's assets, liabilities, and stockholders' equity as of the report date. In this report, the total of all assets must match the combined total of all liabilities and equity.
The format of Balance Sheet (also known as Position Statement) as per Part I of Schedule III of Companies Act, 2013 is as follows:
Name of the Company….
BALANCE SHEET as at 31st March 20XX…
Figure as at the end of Current reporting period
Figure as at the end of Previous reporting period
I. 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
1) Non-Current Assets
(a) Property, Plant and 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
(c) Trade receivables
(d) Cash and cash equivalents
(e) Short term loans and advances
(f) Other current assets
See accompanying notes to the financial statements
Statement of Profit and loss is a statement that shows the financial performance of a company, i.e., profit earned or loss incurred during the accounting period. The format of Statement of Profit and loss (also known as Income Statement) as per Part II of Schedule III of Companies Act, 2013 is as follows
Statement of Profit and loss for the year ended 31st March 20XX…..
The assets are contingent because they arise from unexpected events. Contingent assets will not be recognised in financial statements until they are certain....
If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision. Click to know more....
Reserve and surplus are created from undistributed profits for specific purposes. Reserves will be shown under the heading of Shareholders Fund in the balance sheet....
if the share issue price is higher than face value, the excess amount shall be transferred to a securities premium account. Know more about security premium under companies act...