Page 103 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting

Notes that every profit and loss account shall comply with the requirements of Part II of the schedule.
All the companies in India are, by force, made to adopt the format. Any deviation from the form
prescribed shall be made only with the specific approval of Central Government. Corporates
should, therefore, exercise utmost care in the preparation and presentation of the financial
statements. It may be mentioned that the message conveyed by these statements are similar to
that of non-corporate reports, except for the greater degree of disclosure, which are on the lines
of the generally accepted accounting principles.

Self Assessment

Fill in the blanks:
7. …………of the Companies Act, 1956 stipulates that the board of directors of every company
should submit, before the annual general meeting of the company, a duly audited profit
and loss account and balance sheet.
8. Three copies of the annual reports as approved by the shareholder are to be filed with the
…………within thirty days of the meeting in which they were approved.
9. The Institute of Chartered Accountants of India has issued standard on …………..AS17.
10. Companies with multiple ……………..and those with area of operation extending beyond
the boundaries of the country would have to present separate financial report for each of
the activities and for each territory.

8.5 Disclosure Requirements of Balance Sheet

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-section 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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Caution The Balance Sheet must give a true and fair view of the company activities. This
form may be in any other form with the consent of the Central Government.

8.5.1 Statutory Contents of Liabilities side of Balance Sheet

There are two types of items shown on the liabilities side of the Balance sheet.
1. The items relating to owners equity and

2. The items relating to borrowers’ capital
The main items relating to owner’s capital: The main item are as follows:
1. Share capital

2. Reserves and surplus

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