The document discusses the framework for preparation and presentation of financial statements in India as per the Accounting Standards Board. It explains that the framework sets out concepts like the objective of financial statements, qualitative characteristics, definition and recognition of elements, and concepts of capital and capital maintenance. The framework assists in applying accounting standards, developing future standards, promoting harmonization, and interpreting financial statements. It also covers the scope, components, and elements of financial statements like the balance sheet and statement of profit and loss. Key assumptions of the framework include accrual basis, going concern concept, and consistency.

1. -
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2. Framework for Preparation
And Presentation of
Financial statement
By the end of this session, you will be
able to learn the framework for
preparation and presentation of
Financial statement
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3. Introduction
• The Framework for the Preparation and Presentation of Financial
Statements is issued by the Accounting Standards Board of the
Institute of Chartered Accountants of India
• This Framework sets out the concepts that underline the preparation
and presentation of financial statements for external users
• This Framework is not an Accounting Standard and hence does not
define standards for any particular measurement or disclosure issue.
• Nothing in this Framework overrides any specific Accounting
Standard
• The Framework will be revised from time to time on the basis of the
experience of the Accounting Standards Board of working with it
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4. Purpose of the Framework
• assist preparers of financial statements in applying
Accounting Standards
• assist the Accounting Standards Board in the development
of future Accounting Standards
• assist the Accounting Standards Board in promoting
harmonization of regulations, accounting standards and
procedures
• assist auditors in forming an opinion as to whether
financial statements conform with Accounting Standards
• assist users of financial statements in interpreting the
information contained in financial statements
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5. Scope of the Framework
The Framework deals with:
• the objective of financial statements
• the qualitative characteristics that determine
the usefulness of information provided in
financial statements
• definition, recognition and measurement of
the elements from which financial statements
are constructed
• concepts of capital and capital maintenance
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6. Financial Statements
• Financial Statements are the end products of
accounting process and are prepared at end
of the accounting period
• to reveal the financial position of the
enterprise at a particular date and the result
of its business operations preparing an
accounting period.
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7. Components of Financial Statement
• As per Section 2(40) of the Companies Act,
2013- Financial Statements includes:
1. Balance Sheet or Position Statement
2. Statement of Profit and Loss or Income
Statement
3. Notes to Accounts.
4. Cash Flow Statement
5. a statement of changes in equity,
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8. BCCC 0011 Company Accounts And
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9. Balance sheet
• A balance sheet gives a statement of a business’s
assets, liabilities and shareholders equity at a
specific point in time.
• They offer a snapshot of what your business
owns and what it owes as well as the amount
invested by its owners, reported on a single day.
• The balance sheet of a company is prepared as
per the formal prescribed in part I of Schedule III
of the Companies Act, 2013.
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10. Elements of Balance Sheet
Assets. An asset is a resource controlled by the entity as
a result of past events and from which future
economic benefits are expected to flow to the entity.
Liabilities. Liability is a present obligation of the entity
arising from past events, the settlement of which is
expected to result in an outflow from the entity of
resources embodying economic benefits.
Equity. Equity is the residual interest in the assets of the
entity after deducting all its liabilities.
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11. Balance Sheet
Particulars Note
No.
Figures as at the
end of current
reporting period
Figures as at the
end of previous
reporting period
I. EQUITY AND LIABILITIES
1) Shareholder’s Funds
(a) Share Capital
(b) Reserves and Surplus
(c) Money received against share warrants
(2) Share application money pending allotment
(3) Non-Current Liabilities
(a) Long-term borrowings
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long term provisions
(4) Current Liabilities
(a) Short-term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short-term provisions
Total
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12. II.Assets
(1) Non-current assets
(2) (a) Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
(iv) Intangible assets under development
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long term loans and advances
(e) Other non-current assets
(2) Current assets
(a) Current investments
(b) Inventories
(c) Trade receivables
(d) Cash and cash equivalents
(e) Short-term loans and advances
(f) Other current assets
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13. Some Importance Headings
Particulars Main heading Sub heading
current investments assets cash and cash equivalents
deferred tax liability equity and liability non current liability
plant and equipment assets non current assets
goodwill assets non current assets
capital work in progress assets non current assets
trademark assets non current assets
deferred tax assets assets non current assets
loose tools assets current assets
security deposits assets non current investments
stock in trade assets current assets
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14. State under which major headings and sub-headings
will the following items be presented in the Balance
Sheet of a company as per Schedule-III, Part-I of the
Companies Act, 2013.
(i) Prepaid Insurance
(ii) Investment in Debentures
(iii) Calls-in-arrears
(iv) Unpaid dividend
(v) Capital Reserve
(vi) Loose Tools
(vii) Capital work-in-progress
(viii) Patents being developed by the company.
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15. ANS
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16. T/F
1. Framework for the Preparation and Presentation of
Financial Statements is issued by the Accounting
Standards Board- T/F
2. Framework is an Accounting Standard and define
standards for any particular measurement -T/F
3. Framework can overrides any specific Accounting
Standard – T/F
4. Financial Statements are the begaining products of
accounting process
5. Deferred tax liability shown in current liability – T/F
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17. 4.balance sheet, 1.statement of operations ,
2.income statement, 3.changes
1. Income statement is also called profit and loss
statement (P&L) and ……………………
2. The purpose of the …………………… is to show
managers and investors whether the company made
Profit and Loss during the period being reported.
3. Statement of change in equity, explains the
…………………… in a company’s retained earnings over
the reporting period.
4. The …………………… provides an insight into the
financial status of a company at a particular time.
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18. • statement of operations
• income statement
• changes
• balance sheet
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19. Cash flow statement ,Balance Sheet ,Statement of
change in equity ,Explanatory Notes,profit or loss
1. A ………….can shows liabilities and assets, at a
specified date.
2. ……………….is a summary of company cash sources and
applications
3. ………….. reconciles the equity balances at the
beginning with the balances at the end
4. The ………………..by the enterprise during an
accounting period can be ascertained by income
statement
5. ……………….Annexed to provides additional
information about the company’s operations and
finance.
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20. Statement of Profit and Loss:
• It is a statement prepared to show the result
of business operations during an accounting
period.
• It shows the operating performance of a
company during the accounting period.
• A Statement of Profit & Loss of a Company is
prepared as per the format prescribed in Part
II of Schedule III of the Companies Act, 2013.
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21. Elements of Profit and Loss
Income. Income is increases in economic benefits
during the accounting period in the form of
inflows or enhancements of assets or decreases
of liabilities that result in increases in equity,.
Expenses. Expenses are decreases in economic
benefits during the accounting period in the form
of outflows or depletions of assets or incurrences
of liabilities that result in decrease in equity,
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22. Particulars Note No.
I Revenue from operations (gross)
II Other income
III Total revenue (1+2)
VI Expenses
(a) Cost of materials consumed
(b) Purchases of stock-in-trade
(c) Changes in inventories of finished goods, work-in progress and
stock-in-trade
(d) Employee benefits expense
(e) Finance costs
(f) Depreciation and amortisation expense
(g) Other expenses
Total expenses
V Profit before exceptional and extraordinary items and tax (III-IV)
VI Extraordinary items
VII Profit / (Loss) before extraordinary items and tax (V+VI)
VIII Extraordinary items
IX Profit before tax (Vl (-/+)VIII)
X Tax expense:
(I) Current tax expense for current year
(II) Deferred tax
XV Profit (Loss) for the period (XI + XIV)
XVI Earnings per equity share:
(1) Basic
(2) Diluted
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23. Some Important
particulars main heading sub heading
audit fees expenses other expenses
wages salary bonus expenses
employees benefit
expenses
cost of raw material expenses cost of production
interest income income other income
bad debts recovered income other income
advertisement expenses expenses other expenses
contribution to EPF expenses
employees benefit
expenses
sale of scrap income revenue from operations
power and electricity expenses other expenses
insurance expenses other expensesBCCC 0011 Company Accounts And
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24. True/ False
1. Financial Statements are the end products of
accounting process T
2. An asset is future economic expense are
expected to outflow to the enterprise.F
3. Section 2(40) of the Companies Act, 2013
describes about Financial Statements. T
4. Fund flow statement is a part of financial
statement .F
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25. 1. T
2. F
3. T
4. f
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26. balance sheet ,Asset, Liabilities, III ,
Equity
• balance sheet of a company is prepared as per the
formal prescribed in part I of Schedule of the
Companies Act, 2013
• An ……..is a resource controlled by the enterprise,
which expected future economic benefits
• ………….is a present obligation of the enterprise arising
from past events,
• is the residual interest in the assets of the enterprise
after deducting all its liabilities
• A ………..gives a statement of a business’s assets,
liabilities and shareholders equity at a specific point in
time
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27. • III
• Asset
• Liabilities
• Equity
• balance sheet
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28. • Financial Statements does not includes:
A. Balance Sheet or Position Statement
B. Statement of Profit and Loss or Income
Statement
C. Notes to Accounts.
D. Fund Flow Statement
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29. • 1 D
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30. Statement Of Profit and Loss , Surplus of the
enterprise,CFS,Notes to accounts Position statement , Financial
,Financial status Of the enterprise
1. ……………statements are the basic and formal
annual report.
2. Financial statements include …………and Balance
sheet.
3. Income statement and ………are the financial
statements.
4. The object of preparation of balance sheet is to
ascertain the…….
5. Income statement is prepared to
ascertain______.
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31. Loss ,Shareholders' fund,Intangible assets
,Reserves and Surplus, 12
6. Share capital appears under the head
_____________
7. Capital reserve is shown
under_______________ head.
8. Negative balance of statement of profit and loss
shall be shown as _____________figure under
surplus head.
9. Loans which are repayable within__________
months are called as short borrowings.
10. Fixed assets are classified as tangible
and____________ term assets.
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32. 1. Financial
2. Statement Of Profit and Loss ,CFS,Notes to accounts
3. Position statement
4. Financial status Of the enterprise
5. Surplus of the enterprise
6. Shareholders' fund
7. Reserves and Surplus
8. Loss
9. 12
10. Intangible assets.
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33. True / False
1. Financial statements are the end products of accounting process.T
2. Financial statements are primarily directed towards the need of
owners T
3. Recorded facts are based on replacement cost. F
4. Going concerns concept assumes that the enterprise continues for
a long period of time. T
5. Financial statements provide a summary of accounts. F
6. Financial statements are based on recorded facts. T
7. Patent is an intangible asset. T
8. Financial Statements are prepared on historical cost. T
9. Balance Sheet is a statement containing all the ledger balances
contained in the ledger. F
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34. 1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. FALSE
6. TRUE
7. TRUE
8. TRUE
9. FALSE
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35. MAINTENANCE OF BOOKS OF
ACCOUNTS
• As per Section 128 of the Companies Act, 2013, Every
company shall prepare and keep at its registered
office,all books of account and other relevant books
and papers and financial statements for every financial
year which give a true and fair view of the state of the
affairs of the company , and
• Such books shall be kept on accrual basis and according
to the double entry system Of accounting:
• books of account Of every company relating to a
period of not less than eight financial years
immediately preceding a financial year.
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36. Assumptions for Framework of
Financial Statement
• Assumptions are defined as rules of action or conduct which
are derived from experience and practice, and when they
prove useful, they become accepted principles of accounting
• The assumptions of framework for financial statement are the
pillars on which the structure of accounting is based
• They are part of GAAP
• Underlying assumptions are:
1. Accrual basis
2. Going concern
3. Consistency
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37. 1.Accrual Basis
• The effects of transactions and other events
are recognized when they occur - not as cash
or a cash equivalent is received or paid
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38. 2.Going Concern
• The financial statements are normally prepared on the assumption that an
enterprise is a going concern and will continue in operation for the
foreseeable future.
• has neither the intention nor the need to liquidate or curtail materially the
scale of its operations
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39. 3.Consistency
• In order to achieve comparability of the financial
statements of an enterprise through time, the
accounting policies are followed consistently from
one period to another
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40. Introduction on objectives of
Financial Statement
• may include purpose of compliance, understanding the
fundamentals of the company, measuring the financial strength of
the business, reporting of the performance, results, financial
stability and liquidity to the various stakeholders
• Objectives are the centric reasons as to why the financial
statements are prepared by an organisation. The accounting
standards, reporting frameworks, compulsion of periodic reporting
by the law makers, etc. all these, are existing to satisfy those
objectives.
• Balance sheet, income statement and cash flow statements (also
notes accompanying these) are the components of financial
statements. These three are the pillars for what we say “Financial
Statements”. Each of these are reported with a specific objective
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41. Objectives of Financial Statement
1. True & Fair view of financial position
2. True & fair view of financial performance
3. To provide information about resources
4. To provide Information about the earning potential
5. To form basis for decisions of the stakeholders
6. To report on the effectiveness and efficiency of the
management
7. To increase the understandability of the end users.
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42. Qualitative characteristics of
financial statements
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43. 1.Relevance
• Information must be relevant to the decision-making needs of users
• Information has the quality of relevance when it influences the economic decisions of users
Materiality: The relevance of information is affected by its materiality
• Information is material if its misstatement could influence the economic decisions
• Materiality depends on the size and nature of the item or error, judged in the particular
circumstances of its misstatement.
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44. 2.Reliability
Information has the quality of reliability when it is free
from material error and bias
• Faithful representation
• Substance over form
• Neutrality
• Prudence
• Completeness
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45. 3.Comparability
• Users must be able to compare the financial
statements of an enterprise through time in
order to identify trends in its financial position,
performance and cash flows
• Users must also be able to compare the
financial statements of different enterprises in
order to evaluate their relative financial
position, performance and cash flows
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46. 4.True and Fair View
• Financial statements are frequently described as
showing a true and fair view of the financial
position, performance and cash flows of an
enterprise
• The application of the principal qualitative
characteristics and of appropriate accounting
standards normally results in financial statements
that convey what is generally understood as a
true and fair view of such information.
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47. 2.true and fair , 4.double entry
,3.accrual ,1.registered office,8
1. As per Section 128 of the Companies Act, 2013,
Every company shall prepare and keep at
its…………
2. financial statements give a …………view of the
state of the affairs of the company
3. Companies books shall be kept on…………Basis.
4. Method of Companies books shall be kept on
…………………system Of accounting.
5. books of account Of every company relating to a
period of not less than …………..financial years
immediately preceding a financial year
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48. 1. registered office
2. true and fair
3. accrual basis
4. double entry
5. 8
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49. Q. Assumptions for Framework of
Financial Statement
A. Going concern
B. Accrual basis
C. Double entry system
D. Consistency
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50. Match
1. rules of action or conduct which are
derived from experience and
practice B
2. transactions and other events are
recognized when they occur D
3. assumption that enterprise continue
in operation for foreseeable future.A
4. achieve comparability of the
accounting policies are followed
same C
A. Going
concern
B. Assumptions
C. Consistency
D. Accrual
basis
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51. Match
1. Material to the decision-making needs
of users -c
2. Information free from material error
and bias -B
3. identify trends /Changes in its financial
position, performance and cash flows D
4. application of the principal qualitative
characteristics and of appropriate
accounting standards A
A. Reliable
B. True & Fair
view
C. Relevance
D. Comparability
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52. Constraints to qualitative characteristics of
financial statements
Constraints of accounting are the limitations or
boundaries that are necessary for providing
information with qualitative characteristics.
• The four main constraints are:
1. Timeliness
2. Balance between Benefit and Cost
3. Balance between Qualitative Characteristics
4. Conservatism
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53. 1.Timeliness
• Management may need to balance the
relative merits of timely reporting and the
provision of reliable information.
• To provide information on a timely basis it
may often be necessary to report before all
aspects of a enterprise
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54. 2.Balance between Benefit and
Cost
• The balance between benefit and cost is a
pervasive constraint rather than a qualitative
characteristic.
• The benefits derived from information should
exceed the cost of providing it.
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55. 3.Balance between Qualitative
Characteristics
• In practice, a balancing, or trade-off, between
qualitative characteristics is often necessary.
• Generally the aim is to achieve an appropriate
balance among the characteristics in order to
meet the objective of financial statements.
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56. 4.Conservatism
• According to this principle, the principle of
‘anticipate no profit but provide for all
probable losses’ should be applied.
• The valuation of stock-in-trade at a lower cost
or net realizable value
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57. Recognition of the elements of
financial statements
An item that meets the definition of an element
should be recognized (i.e., incorporated in the
financial statements) if:
it is probable that any future economic benefit
associated with the item will flow to or from
the entity; and
the item has cost or value that can be
measured with reliability.
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58. Measurement of the elements of
financial statements
 Historical cost.
Assets are recorded at the amount of cash or cash
equivalents paid.liabilities are recorded at the
amount of proceeds received in exchange for the
obligation
Current cost.
Assets -cash or cash equivalents ,have to be paid if
the same or an equivalent asset was acquired
currently. Liabilities cash or cash equivalents that
would be required to settle the obligation
currently.
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59.  Realizable (settlement) value.
Assets -obtained by selling the asset in an
orderly disposal. Liabilities are carried at their
settlement values; expected to be paid
Present value.
Assets are carried at the present discounted
value of the future net cash inflows.Liabilities
are carried at the present discounted value of
the future net cash outflows
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60. Indian Accounting Standard (Ind
AS)
• Ind AS stands for Indian Accounting Standard and are
converged standards for IFRS (International Financial
Reporting Standards).
• Ind AS are documents and policies that provide
principles for recognition, measurement, treatment,
presentation and disclosures of accounting transactions
in the Ind AS financial statements.
• Example: Ind AS 16 on Property, Plant and Equipment
(PPE) will provide principles on the criteria on the basis
of which PPE is recognized
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61. Objectives of Ind AS
• Before the introduction of Ind AS, financial statements
were prepared on the basis of Accounting Standards
(AS)which were not in line with the standards and
principles applicable globally (IFRS).
• Moreover, introduction of Ind AS will bring consistency
in the accounting practices and principles followed by
companies in India and other companies across world,
leading to enhanced accessibility and acceptability of
financial statements by global investors
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62. Why Ind AS?
• Ind AS have many benefits, some of which are
discussed below:
• Wider acceptability:
• Changes in standards as per Economic situations:
• Attracts Foreign Investment:
• Saves financial statement preparation cost:
• Comparability of Financials:
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63. Accounting
Treatment of
Special Items
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64. Interest on debenture
• The rate of interest is a prefix value to the debenture, say 9%
Debentures and, therefore, is payable even if the company incurs a
loss. It is a charge against profit. Interest payment may be subject to
tax deducted at source (TDS).
• We show Interest on Debentures as ‘Finance Cost’ in Statement of
Profit and Loss.
• Interest on Debentures is a charge against the profit of
the company.
• We calculate Interest on Debentures at a fixed rate of interest on
the nominal value.
• Interest is not payable on debentures issued as collateral security.
• The interest rate is prefixed.
• We need to transfer the balance in Interest on Debentures to the
Statement of Profit and Loss at the end of the year.
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65. Interest on debenture
• If the amount of interest accrued and due is not paid, it
is known as Interest Accrued and Due or Interest
Outstanding.
• If the date of payment of interest and accounting date
is different, we will credit the Interest Accrued and Due
account at the end of the year to maintain accounting
record on an accrual basis.
• We show the Interest Accrued (whether due or not) on
debentures is under the head ‘Current Liabilities,’ and
sub-head ‘Other Current Liabilities’
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66. Ex.
• Interest for the full year on Rs. 20,00,000 at 14 per cent p.a. is Rs. 2,80,000. Since
an amount of Rs. 70,000 is shown in the trial balance against interest, we may
assume that an amount of Rs. 2,10,000 is outstanding. Usually, debenture interest
is payable every six months.
• Assumption on Interest- In the given illustration we may assume the due dates of
interest to be June 30 and December 31 of every year. While the interest due on
June 30, 2011 has been paid, the amount due on December 31, 2011 has not been
paid and in addition, interest has accrued for the three months period up to March
31, 2012.
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67. • In the profit and loss account, the interest on debentures will be shown as follows:
Explanation-The interest of Rs. 1,40,000 being the interest due for the six month period up to
December 31, 2011, is termed as “interest accrued and due and though this outstanding amount
is a short- term liability, as per Companies Act,
• it must be shown in the balance sheet along with the amount outstanding in respect of
debentures.
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68. Interest Accrued but not due
• The interest of Rs. 70,000 being the interest due for the three
month period up to March 31, 2012, is ‘termed as interest
accrued but not due’ since the next due date for payment of
interest is only June 30, 2012. Interest Accrued but not due
should be shown in the Balance Sheet as a current liability.
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69. collateral security ,nominal ,Finance Cost ,
end ,Charge, Profit and Loss
1. Interest on Debentures is a …………………..against
the profit of the company
2. Interest on Debentures as ‘……….’ in Statement
of…………….
3. We calculate Interest on Debentures at a fixed
rate of interest on the ……………value
4. Interest is not payable on debentures issued
as……………..
5. We need to transfer the balance in Interest
on Debentures to the Statement of Profit and
Loss at the ……………..of the year
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70. Current Liabilities ,accrual ,Interest Outstanding,
prefix, ‘Other Current Liabilities
6. If the amount of interest accrued and due is not paid,
it is known as Interest Accrued and Due or……………..
7. If the date of payment of interest and accounting date
is different, we will credit the Interest Accrued and
Due account at the end of the year to maintain
accounting record on an …………….basis
8. We show the Interest Accrued (whether due or not)
on debentures is under the head ‘…………….,’ and sub-
head…………………….
9. The rate of interest is a ………….value to the debenture
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71. Interest Out of Capital
• Though the Companies Act provides that
dividends to shareholders are payable only
out of profits,
• in certain circumstances with the previous
sanction of the Central Government, interest
may be paid to shareholders out of capital.
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72. Circumstances as specified by
Section 208
• The circumstances as specified by Section 208 of
the Companies Act are as below:
• 1. Where any shares in a company are issued for
the purpose of raising money to defray the
expenses of the construction of any work or
building, or the provision of any plant, and
• 2. Such construction or provision of plant cannot
be made profitable for a lengthy period.
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73. Circumstances as specified by
Section 208
• In the above circumstances, if the company is authorized by
the articles or by a special resolution, it may pay interest on
so much of that share capital as is for the time being paid-
up, for a specified period and charge such interest to capital
as part of the cost of the construction of the work or
building or the provision of the plant.
• The payment of interest shall be made only for such period
as may be determined by the central government. The
period, in any case, cannot extend beyond the close of the
half year next after the half year during which the work or
building has been actually completed or the plant provided.
The rate of interest cannot exceed four per cent per annum
or such other rate as the Central Government may notify.
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74. What is ‘Remuneration?
• ‘Remuneration’ means any money or its
equivalent given to any person for services
rendered by him and includes the perquisites
mentioned in the Income-tax Act, 1961.
• Managerial remuneration in simple words is
the remuneration paid to managerial
personals. Here, managerial personals mean
directors including managing director and
whole-time director, and manager.
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75. Managerial Remuneration
• The remuneration paid to managerial personal
(e.g., directors, managing directors or manager)
of a company in any form or mode is a charge
against profits and thus shown in the debit side
of the profit and loss account.
• The mode of payment of the remuneration may
include the fee for attending the meetings of the
Board, monthly salary, a fixed percentage of
profit and so on.
•
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76. Section 198 of the Companies Act,
2013
• The Companies Act has imposed severe
restrictions on the managerial remuneration
payable by a public company or a private
company which is a subsidiary of a public
company.
• Section 198 (i) provides that the total
managerial remuneration in respect of any
year is subject to an overall limit of 11 percent
of the net profits of the company in that year.
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77. BCCC 0011 Company Accounts And
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78. permissible managerial remuneration
payable under the Companies Act 2013
Condition Max Remuneration in any financial year
Company with one Managing
director/whole time director/manager
5% of the net profits of the company
Company with more than one Managing
director/whole time director/manager
10% of the net profits of the company
Overall Limit on Managerial Remuneration 11% of the net profits of the company
Remuneration payable to directors who are neither managing directors nor whole-time
directors
For directors who are neither managing
director or whole-time directors
1% of the net profits of the company if
there is a managing director/whole time
director
If there is a director who is neither a
Managing director/whole time director
3% of the net profits of the company if
there is no managing director/whole time
director
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79. Inadequate profits/no profits
•Where the effective capital is: Maximum Limits of yearly remuneration
Negative or less than 5 Crores 60 Lakhs
5 crores and above but less than 100
Crores
84 Lakhs
100 Crores and above but less than 250
Crores
120 Lakhs
250 Crores and above 120 Lakhs plus 0.01% of the effective
capital in excess of 250 Crores
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80. Effective Capital
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81. Items to excluded from profits on
calculation of managerial remuneration
1. Premium on shares or debentures
2. Profit on sale of forfeited shares
3. Profits of capital nature including those from the
sale of the undertaking of the company.
4. Profits of capital nature from the sale of any
immovable property or fixed assets.
5. Any change in carrying amount of an asset or
liability recognized in equity reversing surplus in
profit and loss account measurement of the
asset or liability at fair value.
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82. Determination of Remuneration:
• The remuneration payable to the director shall
be determined by:
1. The articles of the company
2. A resolution
3. Special resolution if articles require it to be
passed in the general meeting
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83. Manner of Payment of Remuneration
• Remuneration of Director or Manager may be
paid below mention ways
1. Monthly Payment
2. Specified Percentage Of Profit
3. Partly By One And Partly By Specified
Percentage Of Profit
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84. 11 ,directors , 198 (i) ,Managerial
remuneration, Remuneration
1. ……………….means any money or its equivalent
given to any person for services rendered by him
2. ……………….is the remuneration paid to
managerial personals
3. managerial personals mean ………….including
managing director and whole-time director, and
manager
4. Section ………..provides that the total managerial
remuneration in respect of any year is subject to
an overall limit of ……………percent of the net
profits of the company in that year
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85. 11%,5%,10%
1. Company with one Managing director so Max
Remuneration is…………… percent of the net
profits of the company in that year
2. Company with more than one Managing
director so Max Remuneration is……………
percent of the net profits of the company in that
year
3. Overall Limit on Managerial Remuneration is
…………… percent of the net profits of the
company in that year
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86. T/F
1. In case of Inadequate profit or no profits there is
company can not give remuneration to its directors -
T/F
2. Where is Negative or less than 5 Crores capital so
maximum remuneration to its directors is 60 Lakhs -
T/F
3. Profits of capital nature including in Net Profit for
calculation of managerial remuneration - T/F
4. Premium on shares is not include in Net Profit for
calculation of managerial remuneration - T/F
5. Remuneration of Director may be paid by Monthly
Payment-T/F
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87. Dividend
• A dividend is a distribution made to shareholders
• that is proportional to the number of shares owned. A
dividend is not an expense to the paying company, but
rather a distribution of its retained earnings.
• Dividend refers to a reward, cash or otherwise, that a
company gives to its shareholders. Dividends can be issued
in various forms, such as cash payment, stocks or any other
form.
• A company’s dividend is decided by its board of directors
and it requires the shareholders’ approval.
• However, it is not obligatory for a company to pay dividend.
• Dividend is usually a part of the profit that the company
shares with its shareholders.
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88. TYPE OF DIVIDEND
Cash dividends
Stock dividends
Property dividends
Interim dividends
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89. Types Of Dividend
1. Cash dividends: These are the most common type of
dividend, and they are those paid out in the national
currency of the firm, typically by electronic transfer or
cheque.
2. Stock dividends: These are dividends that are paid
out in the form of additional shares of stock from the
corporation, or a subsidiary corporation.
3. Property dividends: These dividends are paid out in
the form of assets from the corporation.
4. Interim dividends: These are dividends which are
made before a company's annual general meeting
(AGM) and final financial statements are finalised.
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90. Treatment of Dividend
Type of Financial Statement
Impact of Dividends
Balance sheet Will reduce the balance in the Cash
and Retained Earnings accounts once
the dividends have been paid
Income statement Dividends have no impact here, since
they are not an expense
Statement of cash flows Reported as a use of cash in the Cash
Flow from Financing Activities section
Statement of retained earnings Reported as a reduction in retained
earnings
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91. obligatory ,board of directors ,cash
profit ,payment,shareholders,
1. A dividend is a distribution made to…………
2. Dividends can be issued in various forms,
such as………….., stocks or any other form
3. A company’s dividend is decided by its
………….and it requires the…………’ approval
4. it is not ………….for a company to pay
dividend.
5. Dividend is usually a part of the………. that
the company shares with its shareholders
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92. MATCH The Followings
1. paid out in the national
currency, by electronic
transfer or cheque
2. paid out in the form of
additional shares
3. paid out in the form
of assets
4. before a AGM and final
financial statements are
finalised
A. Stock
dividends
B. Cash
dividends
C. Interim
dividends
D. Property
dividends
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93. Match the Followings
1. Income
statement
2. Balance sheet
3. Statement of
retained earnings
4. Statement of
cash flows
A. Will reduce the
balance in the Cash
once dividends paid
B. no impact
C. Outflow of cash
D. Reported as a
reduction
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