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Manpreet Kaur, Lovely Professional University Unit 13: Final Accounts for Companies

Unit 13: Final Accounts for Companies Notes

CONTENTS
Objectives
Introduction
13.1 Meaning

13.2 Form and Contents of Balance Sheet
13.2.1 Schedule VI – Part I (see Section 211) Form of
Balance Sheet – A Horizontal Form

13.2.2 Vertical Form of Balance Sheet
13.3 Explanation of Major Items of Liabilities side of the Balance Sheet
13.4 Profit and Loss Account
13.5 Limitations of Financial Statements

13.6 Summary
13.7 Keywords
13.8 Review Questions
13.9 Further Readings

Objectives

After studying this unit, you should be able to:
 Explain meaning of final accounts
 Understand form and content of Balance Sheet

 Explain different Schedules of Balance Sheet
 Understand explanations of content items of Balance Sheet
 Explain limitations of Financial Statements

Introduction

It is quite natural that the businessman is interested in knowing whether his business is running
on Profit or Loss and also the true financial position of his business. The main aim of Bookkeeping
is to inform the Proprietor, about the business progress and the financial position at the right
time and in the right way.
In the present unit, you will study about the final accounts of the company. After studying this
unit, you will be able to understand the preparation of profit & loss account and balance sheet of
the company. The unit also discussed about the requirements of Schedule VI concerning the P&L
a/c and balance sheet. Financial statements of companies mean: (i) Profit and Loss Account, and
(ii) Balance Sheet. According to Section 209 of the Indian Companies Act, 1956, it is compulsory
for each and every company to prepare its profit and loss account as well as Balance Sheet. It is
also essential to maintain both the accounts in a proper form which is given in the Schedule VI
Part I and II of the Companies Act.

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