FINAL ACCOUNTS OF

COMPANIES
INTRODUCTION
•E v e r y Company, Like Other B u s i n e s s Entities, Must Prepare Final
A c c o u n t s O r Financial Statements Periodically. H o w e v e r, The
U n i q u e n e s s In C a s e O f Companies Is That, The Preparation O f Final
A c c o u n t s O r Financial Statements Is G o v e r n e d By Legislations.
Companies Must Prepare Financial Statements In The Formats
P r e s c r i b e d In The Companies Act.
•Financial Statements O f A Company Includes:
1. I n c o m e Statement
2. Balance S h e e t
3. S t a t e m e n t s o f C h a n g e s i n E q u i t y
4. N o t e s A n n e x e d t o t h e A c c o u n t
INCOME STATEMENT
AN I N CO M E STATEMENT IS PREPARED TO
ASCERTAIN THE R E S U LT S O F THE B U S I N E S S
(PROFITS M A D E O R L O S S INCURRED) F O R A GIVEN
ACCOU N TIN G PERIOD.
 INCOME STATEMENT F O R THE Y E
Particulars AR E N D I N G … … .
Note
₹
Net Sales Revenues XXX
Less: Cost of goods sold 1 XXX
Gross profit XXX
Less: Operating expenses 2 XXX
EBITDA XXX
Less: Depreciation and Amortization XXX
EBIT XXX
Less: Interest on Borrowings 3 XXX
Add: Non-Operating Incomes & Gains XXX
Less: Non-Operating expenses & losses XXX
EBT XXX
Less: Taxes XXX
EAT XXX
Less: Dividends and Appropriations 4 XXX
Retained Earnings XXX
Add: Opening balance of P&L A/C XXX
 NOTE 1: COST OF GOODS
SOLD

Particulars ₹ ₹

Opening stock XXX

Add: Purchases XXX
Less: Closing stock XXX
Raw material consumed during the year XXX
Add: conversion expenses (wages, factory overheads, etc.) XXX
Add: opening stock of work in progress XXX
Less: closing stock of work in progress XXX
Cost of production XXX
Add: opening stock of finished goods XXX
Less: closing stock of finished goods XXX
Cost of goods sold XXX
 PARTICULA
Note 2:
RS ₹ ₹
Operating
Expenses Administration Expenses XXX
Rents, rates, taxes, etc XXX
Salaries XXX
General expenses XXX
Audit fees XXX
Directors fees XXX XXX
XXX
Selling and distribution expenses
Travelling expenses XXX
Carriage outwards XXX
Advertisements XXX
Discounts allowed XXX
Warehouse charges XXX
Sales commission XXX
Bad debts XXX
Add: new reserve for doubtful debts XXX
Less: old reserve for doubtful debts XXX
Other expenses XXX
Less: operating incomes and gains XXX XXX
Cash operating expenses and loss (Net) XXX
NOTE 3: INTEREST ON BORROWINGS

Particulars ₹ ₹
Interest on Mortgage Loans XXX
Interest on Debentures Paid XXX
Add: Outstanding Interest on Debentures XXX XXX
Total XXX
NOTE 4: DIVIDENDS AND
APPROPRIATIONS
Particulars ₹ ₹
Dividend Paid XXX
Interim dividend paid XXX
Proposed dividend XXX
Corporate Dividend Tax XXX
Transfer to General reserve XXX
Transfer to reserve fund XXX
Transfer to Sinking fund XXX
Transfer to other reserves XXX
Total XXX
 TERMS OF INCOME STATEMENT
1. REVENUES
REVENUES = S A L E S F O R THE YEAR – S A L E S RETU RN S –
E X C I S E DUTY
2. C O S T O F G O O D S SOLD
a. IN C A S E O F TRADING ENTITIES:
C O S T O F G O O D S S O L D = OPENING S TO C K O F FINISHED G O O D S
+
P U R C H A S E S D U R I N G THE YEAR – C L O S I N G S TO C K O F
FINISHED G O O D S
b. IN C A S E O F MANUFACTURING ENTITIES:
C O S T O F G O O D S S O L D = RAW MATERIAL C O N S U M E D +
CONVERSION COST
3. GROSS PROFIT
THE PROFITS GENERATED FROM THE MAIN ACTIVITY OF TRADING OR
MANUFACTURING, BY THE COMPANY.
4. OPERATING EXPENSES
INCLUDES ALL EXPENSES INCURRED FOR OPERATING THE BUSINESS.
5. EBITDA
REFERS TO EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION.
6. DEPRECIATION
REFERS TO PROVISION FOR REPLACEMENT OF FIXED ASSETS.
7. AMORTIZATION
REFERS TO WRITING OFF OF SUNK COSTS, DEFERRED REVENUE EXPENSES AND
INTANGIBLE ASSETS WHICH NEED NOT BE REPLACED.
8. EBIT
REFERS TO EARNINGS BEFORE INTEREST AND TAX.
9. INTEREST ON BORROWINGS
REFERS TO INTEREST ON LOANS BORROWED BY THE COMPANY.
10.NON-OPERATING INCOMES - INCLUDE INCOME FROM INVESTMENTS, BANK INTEREST ETC.,
WHICH ARE NOT GENERATED FROM THE OPERATING ACTIVITIES OF THE COMPANY.
11.EBT
REFERS TO EARNINGS BEFORE TAX.
12.TAXES
REFERS TO THE INCOME TAX.
13.EAT
REFERS TO EARNINGS AFTER TAX.
14.DIVIDENDS
REFERS TO SHARE OF PROFITS DISTRIBUTED BY THE COMPANY TO ITS
SHAREHOLDERS.
15.RETAINED EARNINGS
REFERS TO THE PROFITS OF THE YEAR RETAINED IN THE BUSINESS.
BALANCE SHEET
A BALANCE SHEET IS A STATEMENT OF SOURCES AND
APPLICATION OF FUNDS. THE BALANCE SHEET
PRESENTS THE ‘SOURCES’ FROM WHICH THE
COMPANY HAS MOBILIZED FUNDS REQUIRED FOR
THE BUSINESS, AND THE ‘UTILIZATION’ OF THE
FUNDS.
BALANCE SHEET AS O N … … … .
Particulars Note ₹
Equities & Liabilities
Share capital 5 XXX
Reserve and surplus 6 XXX
Non-current liabilities
Secured loans 7 XXX
Unsecured loans 8 XXX
Current liabilities 9 XXX
Total XXX
Assets
Non-current assets
Fixed assets 10 XXX
Investments 11 XXX
Other non-current assets 12
Current assets, loans and advances 13 XXX
Total XXX
NOTE 5: SHARE CAPITAL
Particulars ₹ ₹

Authorised capital XXX

Issued capital XXX

Subscribed capital XXX

Call-up capital XXX

Less: Call-in arrears XXX

Add: Share for future XXX XXX

Paid up capital XXX

Calls-in advance XXX

Total XXX
NOTE 6: RESERVE & SURPLUS

Particular ₹ ₹
Capital reserve XXX
General reserve XXX
Reserve fund XXX
Shrinking fund XXX
Securities premium XXX
Other reserve XXX
Profit and loss account (surplus) XXX
Total XXX
 NOTE 7: SECURED LOANS
Particulars ₹ ₹
Mortgage loans XXX
Debentures XXX
Add: Outstanding Interest on Debentures XXX XXX
Total XXX

Note 8: Unsecured loans

Particulars ₹ ₹
Ba nk loan XXX
Loans from Subsidiary Companies XXX
Fixed Deposits from public XXX
Total XXX
NOTE 9: CURRENT LIABILITIES AND PROVISIONS

Particulars ₹ ₹
Sundry Creditors XXX
Bills Payable XXX
B an k Overdraft XXX
Unclaimed Dividend XXX
Outstanding Expenses XXX
Incomes Received in Advance XXX
Provisions for Tax XXX
Proposed Dividend XXX
Corporate Dividend Tax XXX
Total XXX
NOTE 10: FIXED
ASSETS
Particulars Land Buildings Plant Furniture Vehicles Other assets Total
Initial Value XXX XXX XXX XXX XXX XXX XXX
Depreciation charge XXX XXX XXX XXX XXX XXX XXX
Net Block XXX XXX XXX XXX XXX XXX XXX

Note 11: Investments

Particulars ₹ ₹
Investments in Government Securities XXX
Investments in Approved Securities XXX
Investments in Shares XXX
Investments in Debentures XXX
Others XXX
Total XXX
NOTE 12: OTHER NON-CURRENT ASSETS (MISCELLANEOUS
EXPENDITURE)

Particulars ₹ ₹
Preliminary Expenses XXX
Less: Written Off XXX XXX
Underwriting Commission XXX
Discount on Issue of Shares and Debentures XXX
Profit & Loss Account Debit balance XXX
Total XXX
 NOTE 13: CURRENT ASSETS, LOANS AND
ADVANCES

Particulars ₹ ₹
C a s h in hand XXX
C a s h at bank XXX
Sundry debtors XXX
Bills receivable XXX
Inventory XXX
Outstanding incomes XXX
Pre-paid expenses XXX
Tax deducted at source XXX
Loose tools XXX
Advances XXX
Total XXX
TERMS OF BALANCE SHEET
1. S H A R E CAPITAL
A. AUTHORIZED CAPITAL
B. I S S U E D CAPITAL
C. S U B S C R I B E D CAPITAL
D. CALLED UP CAPITAL
E. PAID-UP CAPITAL

2. R E S E RV E AND SURPLUS
R E F E R S TO THE PROFITS SET-ASIDE F O R MEETING SP E C IF IC FUTURE
REQUIREMEN T S O R ANY FUTURE CONTINGENCIES.
3. SECURED LOANS
REFERS TO THE LOANS BORROWED BY THE COMPANY FROM FINANCIAL
INSTITUTIONS AND BANKS; OR BY ISSUE OF DEBENTURES.
4. UNSECURED LOANS
REFERS TO LOANS BORROWED BY THE COMPANY ON PERSONAL GUARANTEE
OR WITHOUT ANY SECURITY.
5. FIXED ASSETS
REFERS TO ASSETS WHICH ARE MEANT FOR LONG-TERM USE AND THE
VOLUME OF WHICH DO NOT CHANGE FREQUENTLY.
6. INVESTMENTS
REFER TO SURPLUS FUNDS WITH THE COMPANY INVESTED OUTSIDE THE
BUSINESS.
7. CURRENT ASSETS
REFER TO THE ASSETS WHICH ARE MEANT FOR SHORT-TERM USE AND THE
VOLUME OF WHICH CHANGES VERY FREQUENTLY.
8. LOANS AND ADVANCES
REFER TO LOANS EXTENDED BY THE COMPANY TO ITS EMPLOYEES AND
OTHERS.
9. CURRENT LIABILITIES
REFER TO SHORT-TERM SOURCE OF FUNDS.
10. PROVISIONS
REFERS TO PROFITS SET ASIDE FOR MEETING SHORT-TERM OBLIGATIONS.
11. MISCELLANEOUS EXPENSES
REFER TO ANY DEFERRED REVENUES EXPENSES, LIKE PRELIMINARY EXPENSES,
DISCOUNT ON ISSUE OF SHARES OR DEBENTURES ETC., TO THE EXTENT NOT
YET WRITTEN OFF TO THE INCOME STATEMENT.
12. LOSSES
REFER TO EXCESS OF EXPENSES OVER INCOMES, ACCUMULATED OVER THE
YEARS.
ITEMS WHILE PREPARING FINAL ACCOUNTS OF JOINT STOCK
COMPANIES

1. GOODS DISTRIBUTED AS FREE SAMPLES

2. GOODS DESTROYED BY FIRE ACCIDENT
3. DEBENTURE INTEREST
4. TRANSFER FEE ON SHARES
5. CALLS IN ARREARS
6. CALLS IN ADVANCE
7. FO R FE ITE D S H A R E S
8. CONTINGENT LIABILITIES
9. PRELIMINARY E X P E N S E S
10. UNDERWRITING CO M M I S S I O N
11. D I S C O U N T O N I S S U E O F S H A R E S AND D E B E N T U R E S
12. INTERIM DIVIDEND
13. P RO P O S E D DIVIDEND
14. UN CLAIMED DIVIDEND
15. I N CO M E TAX
16. PROVISION F O R TAX
17. ADVANCE TAX
18. TAX D E D U C T E D AT S O U R C E (TDS)
19. CO RP O RATE DIVIDEND TAX O R DIVIDEND DISTRIBUTION TAX