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Notes: 1. Terms of redemption or
Where sums have been written
conversion (if any) of any
off on a reduction of capital or a
redeemable preference capital are
revaluation of assets, every
balance sheet, (after the first
to be stated together with earliest
balance sheet) subsequent to the
date of redemption or conversion.
reduction or revaluation shall
2. Particulars of any option on
show the reduced figures with
unissued share capital are to be
the date of the reduction in
specified.
place of the original cost. Each
3. Particulars of the different
classes of preference shares are to balance sheet for the first five
years subsequent to the date of
be given. These particulars are to
the reduction, shall show also
be given along with shares capital
In the case of subsidiary the amount of the reduction
Accounting for Companies-I made.
companies, the number of shares
held of the holding company as Similarly, where sums have
well as by the ultimate holding been added by written up the
company and its subsidiaries assets, every balance sheet
shall be separately stated in subsequent to such writing up
Notes respect of subscribed share shall show the increased figure
capital. The auditor is not with the date of the increased in
required to certify the correctness place of the original cost. Each
of such share holding as certified balance sheet for the first five
by the management. years subsequent to the date of
the written up shall also show
the amount of increase made.
Explanation: Nothing contained
in the preceding two paragraphs
shall apply to any adjustment
made in accordance with the
second paragraph.
Reserve and Surplus: Investment:
(1) Capital Reserve. Showing nature of investment
(2) Capital Redemption Reserve. and mode of valuation, for
example, cost or market value
(3) Shares Premium Account
and distinguishing between-
(showing details of its utilization
in the manner provided in Section (1) Investment in Government
78 in the year of utilization). or Trust Securities
(4) Other Reserve specifying the (2) Investment in shares,
nature of each Reserve and the debentures or bonds. (Showing
amount in respect thereof. separate shares fully paid up
and partly paid up and also
Less: Debit balance in profit and
distinguishing the different
loss account (if any). (The debit
classes of shares and showing
balance in the Profit and Loss
Account shall be shown as a also in similar detail, investment
in shares, debentures or bonds
deduction from the uncommitted
details of subsidiary
reserve, if any).
companies).
(5) Surplus, i.e. balance in profit
and loss account after providing (3) Immovable properties
for proposed allocations namely: (4) Balance of the investments in
Dividend Bonus or Reserve. the capital partnership firm.
(6) Proposed additions to (5) Balance of unutilized monies
Reserves. raised by issue. (Aggregate
amount of the company’s
(7) Sinking Funds (Additions and
quoted investment and also the
deductions since last balance
sheet to be shown, under each of market value thereof shall be
shown).
the specified heads. The word
‘Fund’ in relation to any (Aggregate amount of the
“Reserve” should be used only company’s unquoted
where such Reserve is specifically investments shall also be
represented by earmarked shown). (All unutilized monies
investments). out of issue must be separately
disclosed in the Balance Sheet of
the company) indicating the
manner in which such
unutilized funds have been
invested.
Secured Loans: Current Assets’ Loans
(1) Debentures and Advance:
(2) Loans and Advance from (A) Current Assets (1) Interest
Banks accrued in Investment (2) Store
(3) Loans and Advance from and spare paid (3) Loose Tools
Subsidiaries. (4) Stock-in-Trade (5) Work-in-
Progress [In respect of (2) and
(4) Other Loans and Advance
(4), mode of valuation of stock
(Loans from directors and/or
shall be stated and the amount
manager should be shown
separately). Interest accrued and in respect of raw materials shall
also be stated separately where
due on Secured Loans should be
practicable. Mode of valuation
included under the appropriate
sub-heads under the head of work-in-progress shall be
stated].
“Secured Loans”.
(6) Sundry Debtors–(a) Debts
The nature of security to be
outstanding for a period
specified in each case.
exceeding six months. (b) Other
Where loans have been
debts Less: Provision (The
guaranteed by manager and/or
amounts to be shown under
directors, a mountain thereof, Sundry Debtors shall include
shall also be made and also the
the amount due in respect of
aggregate amount of such loans
goods sold or service rendered Contd...
under each head. In case of or in respect of other contractual
Debentures, terms of redemption
obligations but shall not include
or conversion (if any) are to be
the amounts which are in the
stated together with earliest date nature of loans or advances).
LOVELY PROFESSIONAL UNIVERSITY
312 of redemption or conversion. In regard to Sundry Debtors
Unsecured Loans:
particulars to be given
1. Fixed Deposits
separately of-
(2) Loans and Advance from (a) Debts considered good and
Subsidiaries.
in respect of which the company
(3) Short-term Loans and is fully secured.
Advance.
(b) Debts considered good for
(a) From Banks (b) From Others which the company holds no
(Short-term loans include those security other than the debtor’s
which are due for repayment not personal security; and
late than one year as at the date of (c) Debts considered doubtful or
the balance sheet). bad. Debts due by directors or
(4) Other Loans and Advance other officers of the company
(a) From Banks (b) From Others any of either severally or jointly
with any other person, or debts
(Loans from directors and/or
due by firms or private
manager should be shown
companies respectively in which
separately).
any director is a partner or a
Interest accrued and due on
director or a member to be
Unsecured Loans should be
included under the appropriate separately stated.
sub-head “Unsecured Loans” Debts due from other companies
where Loans have been under the same management
guaranteed by manager and/or within the meaning of sub-
directors, a mention thereof shall section (IB) of Section 370 to be
be made together with the disclosed with the names of the
companies. The maximum
aggregate amount of such loans
amount due by directors or
under each head.
other officers of the company at
Current Liabilities and
any time during the year to be
Provisions: shown by way of a note. The
(A) Current Liabilities provision to be shown under
1. Acceptance this head should not exceed the
2. Sundry Creditors amount of debts stated to be
considered doubtful or bad and
3. Subsidiary Companies
any surplus of such provision, if
4. Advance Payments and
already created, should be
unexpired discounts for the
shown at every closing under
portions for which value has still “Reserve and Surplus” (in the
to be given e.g. in the case of the
Liabilities side) under a separate
following classes of companies:
sub- head “Reserve for Doubtful
Newspaper’s Fire Insurance, or Bad Debts.” (7A) Cash
Theatres, Clubs, Banking, balance on hand. (7B) Bank
Steamship Companies etc.
balance-(a) with Scheduled
5. Unclaimed Dividends
Banks and (b) with other. In
6. Other Liabilities (if any) regard to bank balance,
7. Interest accrued but not due on particulars to be given
loans. separately of- (i) the balance
(B) Provision lying with scheduled Banks on
1. Provision for Taxation current account, call accounts
and deposit account. (ii) the
2. Proposed Dividend
names of the bankers other than
3. For Contingencies
scheduled Banks and the
4. For Provident Fund Scheme. balance lying with each such
5. For Insurance, Pension and banker on current accounts, call
similar staff benefit schemes. account and deposit accounts
6. Other Provision: A foot-note to and the maximum amount
the balance sheet may be added to outstanding at any time during
show separately:- the year with each such bankers;
and (iii) the nature of the
1. Claims against the company
not acknowledged as debts. interest, if any, of any director
or his relative in each of the
2. Uncalled liability on shares bankers [other than Scheduled
partly paid.
Bankers referred in (ii) above.]
3. Arrears of fixed cumulative (iv) all unutilized monies out of
dividend. (The period for which
the issue must be separately
the dividend are in arrear or if disclosed in the Balance Sheet of
there is more than one class of the company indicating the
shares, the dividend on each such
manner in which such
class that are in arrear, shall be
unutilized funds have been
