Company Final accounts

Bangalore University, BBA, 3rd Sem, CA, Unit 1, Company final accounts

1. Company final accounts Presented By: Yeshwanth Gayathri Pratisha

2. Introduction Every company, like other business entities, must prepare final accounts or financial statements periodically. However, the uniqueness in case of companies is that, the preparation of final accounts or financial statements is governed by legislations. Companies must prepare financial statements in the formats prescribed in The Companies Act. Financial statements of a company includes: Income statement Balance sheet

3. Income statement An income statement is prepared to ascertain the results of the business (profits made or loss incurred) for a given accounting period.

4. Particulars 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 Closing balance of P&L A/C XXX INCOME STATEMENT FOR THE YEAR ENDING…….

5. Partic ulars ₹ ₹ 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 Note 1: Cost of goods sold

6. Particulars ₹ ₹ 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 2: Operating Expenses

7. Particulars ₹ ₹ Interest on Mortgage Loans XXX Interest on Debentures Paid XXX Add: Outstanding Interest on Debentures XXX XXX Total XXX Note 3: Interest on Borrowings

8. 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 Note 4: Dividends and Appropriations

9. Terms of income statement Revenues revenues = sales for the year – sales returns – excise duty Cost of goods sold In case of trading entities: cost of goods sold = opening stock of finished goods + purchases during the year – closing stock of finished goods In case of manufacturing entities: cost of goods sold = raw material consumed + conversion cost

10. Gross profit the profits generated from the main activity of trading or manufacturing, by the company. Operating expenses includes all expenses incurred for operating the business. Ebitda refers to Earnings before interest, taxes, depreciation and amortization. Depreciation refers to provision for replacement of fixed assets. Amortization refers to writing off of sunk costs, deferred revenue expenses and intangible assets which need not be replaced. Ebit refers to earnings before interest and tax. Interest on borrowings refers to interest on loans borrowed by the company.

11. Non-operating incomes include income from investments, bank interest etc., which are not generated from the operating activities of the company. Ebt refers to earnings before tax. Taxes refers to the income tax. Eat refers to earnings after tax. Dividends refers to share of profits distributed by the company to its shareholders. Retained earnings refers to the profits of the year retained in the business.

12. 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.

13. 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 Balance Sheet as on……….

14. 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 5: Share Capital

15. 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 6: Reserve & Surplus

16. Particulars ₹ ₹ Mortgage loans XXX Debentures XXX Add: Outstanding Interest on Debentures XXX XXX Total XXX Note 7: Secured loans Particulars ₹ ₹ Bank loan XXX Loans from Subsidiary Companies XXX Fixed Deposits from public XXX Total XXX Note 8: Unsecured loans

17. Particulars ₹ ₹ Sundry Creditors XXX Bills Payable XXX Bank 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 9: Current Liabilities and Provisions

18. 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 Particulars ₹ ₹ Investments in Government Securities XXX Investments in Approved Securities XXX Investments in Shares XXX Investments in Debentures XXX Others XXX Total XXX Note 10: Fixed Assets Note 11: Investments

19. 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 12: Other Non-Current Assets (Miscellaneous Expenditure)

20. Particulars ₹ ₹ Cash in hand XXX Cash 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 Note 13: Current Assets, Loans and Advances

21. Terms of balance sheet Share capital Authorized capital Issued capital Subscribed capital Called up capital Paid-up capital Reserve and surplus refers to the profits set-aside for meeting specific future requirements or any future contingencies.

22. Secured loans refers to the loans borrowed by the company from financial institutions and banks; or by issue of debentures. Unsecured loans refers to loans borrowed by the company on personal guarantee or without any security. Fixed assets refers to assets which are meant for long-term use and the volume of which do not change frequently. Investments refer to surplus funds with the company invested outside the business. Current assets refer to the assets which are meant for short-term use and the volume of which changes very frequently.

23. Loans and advances refer to loans extended by the company to its employees and others. Current liabilities refer to short-term source of funds. Provisions refers to profits set aside for meeting short-term obligations. 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. Losses refer to excess of expenses over incomes, accumulated over the years.

24. items while preparing final accounts of joint stock companies Goods distributed as free samples Goods destroyed by fire accident Debenture interest Transfer fee on shares Calls in arrears Calls in advance

25. Forfeited shares Contingent liabilities Preliminary expenses Underwriting commission Discount on issue of shares and debentures Interim dividend Proposed dividend Unclaimed dividend Income tax Provision for tax Advance tax Tax deducted at source ( tds ) Corporate dividend tax or dividend distribution tax

26. Thank you Reference: CA (Himalaya Publishing House) IIIrd Sem. BBA Bangalore University