Page 116 - DCOM409_CONTEMPORARY_ACCOUNTING

Unit 8: Corporate Reporting

The company allotted all shares. However it was found that 17,500 equity subscribers had Notes
not paid the allotment money and another 12,750 subscribers, who had paid allotment,
defaulted in meeting the call. The company, after due notice forfeited the shares on which
allotment money was not paid. These shares were later reissued at ` 80.

8.8 Summary

Financial reporting in corporate organisations is regulated by the laws under which the
organizations are registered.
As such, these reports are more transparent compared to non-corporate financial reports.
The Companies Act, 1956 has prescribed a format in which corporates are to present their
balance sheet.
For profit and loss account, the act has laid down parameters to be followed.
A corporate can present its financial reporting in a horizontal ‘T’ form or in a vertical
statement form.
Details on each of the items of balance sheet and profit and loss account are required to be
furnished as schedules or notes.
The prescribed corporate balance sheet follows the permanency method for marshalling
assets and liabilities.
The liability side of balance sheet has five segments—for share capital, reserves and
surpluses, secured and unsecured loans, current liabilities and provisions.
In the assets side, fixed assets, investments, current assets and miscellaneous expenses are
the groups.
The profit and loss account of a corporate can be prepared as per the pattern chosen by the
directors.
The financial statements are also to be accompanied by auditors’ report and directors’
report. The statements have to be audited and placed before the shareholders at the annual
general meeting, within six months of the expiry of the financial year.
Three copies of the report are to be furnished to the registrar of companies within thirty
days of laying the report in annual general meeting.
The reports should be signed by the managing director and at least one more director.
8.9 Keywords

Contingent Liabilities: Contingent liabilities are such liabilities which may exist or may not
exist subject to happening or not happening the event.

Secured Loans: If any security is given by way of a mortgage or charge on all or any of its
property, the loan is termed as secured loan.
Share Capital: It means the share of the owner’s in the company.

Unsecured Loans: If a company borrows loans without giving any security, then such loans are
termed as unsecured loans.

8.10 Review Questions

1. What on the Key qualitative characteristics of financial reporting informations?
2. Are non-corporate business organizations legally obliged to prepare financial statements?

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