Page 341 - DCOM201_ACCOUNTING_FOR_COMPANIES_I

Accounting for Companies-I

Notes 6. Tax Expense – Others
Others shall be specified separately.
7. Any item for which the expense exceeds one percent of the revenues from operations of
the Company or 1,00,000 whichever is higher, shall be shown as a separate and distinct
item under the appropriate head of expense in the notes to accounts and shall not be
combined with any other item.

8. Results from discontinued operations included in the statement of profit and loss i.e.
income (loss) from activities and gain (loss) from disposal of assets/settlement of liabilities
shall be disclosed separately in the notes to accounts.
Self Assessment

Fill in the blanks:
1. ……………… account enables the trader to find out Gross Profit or Loss.
2. ……………… account enables the trader to find out the Net Profit or Loss.
3. Direct Expenses appears on ……………… side of ……………… account.
4. Indirect Expenses appears on ……………… side of ……………… account.
5. If the Trial Balance contains both Trade Expenses and Office Expenses, the Trade Expenses.
6. Posted to ……………… account and office expenses posted to ……………… account.

14.2 Preparation of Balance Sheet

According to Institute of Chartered Accountants of India Balance Sheet as a statement of the
financial position of an enterprise at a given gate which exhibits its assets liabilities capital,
reserves and other account balances at their respective book values. The balance sheet of a
company is prepared on the same principles, which are followed as for the balance sheet of a
sole proprietor or a partnership firm. The only difference is that in case of a company, the
balance sheet is prepared in a prescribed form so that it can exhibit a true and fair view of the
financial position of the company at a point of time. The assets and liabilities must be shown at
the proper figures neither more or less. There should not be any secret reserve as per law. The
most important function of a balance sheet is to provide full and sufficient information to enable
the reader to judge the financial state of affairs (position) correctly and completely.

Task Analyse the balance sheet of HDFC bank for FY 2009-10.
Requirements of Schedule VI of Indian Companies Act

The balance sheet of a company must be in accordance with the proforma given in Schedule VI
Part I of the Indian Companies Act. This is as per section 211 of the Indian Companies Act, 1956.
Sub-sections (3A), (3B) and (3C) of section 211 have made it compulsory that Profit and Loss
account and Balance Sheet of a Company are prepared in accordance with Accounting Standards
prescribed by the Central Government in consolation with National Advisory Committee on
Accounting Standards (NACAS).
The Act has laid down two forms of Balance Sheet. The two forms are generally known as:
1. Horizontal Form
2. Vertical Form

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