This document outlines the requirements for preparing and presenting financial statements according to Schedule VI of the Companies Act of 1956 in India. It discusses the requirements for maintaining proper books of accounts, preparation of key financial statements including the balance sheet, income statement, and cash flow statement. It provides details on the format and disclosures required for items in the financial statements such as share capital, reserves and surplus, secured and unsecured loans, current and non-current liabilities, provisions, fixed assets, investments, and commitments. The auditor's responsibilities to review the statements and report are also summarized.

1. Company’s Financial Statements
Requirements of Schedule VI
of the Companies Act, 1956

2. Company Accounts
It is the collective responsibility of Board of
Directors (BoD) to maintain books of accounts of
the company. BoD can delegate this
responsibility to Chief Financial Officer (CFO)
or Chief Accounts Officer (CAO) or Company
Secretary (CS), if any person is qualified – either
a Chartered Accountant or a Cost Accountant or
any other prescribed qualification.

3. Company Accounts
• Accounts must be maintained in such a
manner to record in a systematic way:
• All receipts and payments of transactions,
• Purchases, expenses, sales and income,
• Assets and liabilities,
• Such other records as may be necessary and
prescribed by Companies Act.

4. Company Accounts
• CFO or CAO or CS should prepare the
following, at regular intervals:
• Receipts and payments account,
• Income and Expenditure account, or Profit
and Loss account,
• Statement of Affairs or Statement of
Financial Position or Balance Sheet.

5. Company Accounts
• Accounts must strictly follow accrual concept.
Must also conform to all applicable Accounting
Standards prescribed by Institute of Chartered
Accountants of India (ICAI) or National
Accounting Standards Board (NASB), constituted
by Ministry of Corporate Affairs (MCA).
• Accounts must show true and fair view of
financial position of the company for the period.

6. Company Accounts
• Company must send to members (shareholders) at
annual intervals (normally for year ending 31st
March or such year end date as decided by BoD):
• Balance Sheet, Profit and Loss A/c., Cash Flow
statement of holding co., all subsidiary companies
and consolidated accounts of holding company,
• Auditors’ Report, Directors’ Report and additional
information as prescribed, General Balance Sheet
Profile. These are printed and circulated (called
Annual Report) along with notice of AGM.

7. Company Accounts
• In case of a company listed in stock exchange, the
following additional reports must be sent to
members with Annual Report:
• Corporate Governance Report and compliance
certificate by PCS or statutory auditor,
• Management Discussion & Analysis (MDA),
• Shareholder Information
• It is customary (but optional) to give statistical
information for 5 or 10 years to show progress of
company.

8. Company Accounts
• Accounts must be authenticated by
Company Secretary and signed by CFO
or CAO. These must be signed by
Managing Director or whole-time directors,
if any, or any two directors (including
Chairman), authorized by Board. Accounts
will be certified by auditor.

9. Auditors’ Report
• Auditor must be a member of the Institute of
Chartered Accountants of India. It can be
obtained after passing the examination.
• He has to audit the accounts and certify that:
• He has received all the information for audit,
• Company has maintained the books of accounts
properly as required by Companies Act,
• The B/S and PL A/c., and C/F Statement are in
agreement with books of accounts of company,

10. Auditors’ Report
• Auditor has to report that:
• Balance Sheet shows the state of affairs of
the company at the year end date,
• Profit and Loss Account shows the profit or
loss for the year ended on the date,
• Cash flow statement shows the summarized
cash flows for the year ended on that date,
• Directors are not disqualified to be director.

11. Auditors’ Report
• If auditor passes any adverse remark, it is
qualified report. In case of such qualified report,
directors must explain (in Directors’ Report or
Notes to the Accounts) the reasons for such
qualification and what action they will take to
resolve these or how will they deal with it.
• Auditor will have to give report as required by
Companies Auditors’ Report Order (CARO),
2003. Normally this is given as an annexure to
Auditors’ Report.

12. Directors’ Responsibility
Statement
• Proper accounting records are maintained.
• These comply with provisions of
Companies Act and Accounting Standards.
• They give true and fair view of state of
affairs, profit and cash-flows for the year.
• Internal control systems are in place to
safeguard assets and to prevent and detect
fraud and irregularities.

13. Company Accounts
• Accounts are presented in the Annual
General Meeting (AGM) and adopted by
members / shareholders by voting after
discussion. Normally this is done after
Chairman of the company makes his
speech. Questions, queries are answered
and doubts clarified. Members also
approve dividend proposed by BoD.

14. Schedule VI
• Companies Act prescribes that accounts must be
presented in a format given in Schedule VI to the
Act.
• Company is at liberty to chose either a vertical
format or horizontal format for financial
statements.
• Financial statements consist of Profit & Loss
Account, Balance Sheet, Cash flow statement and
other information as required by Act.

15. Schedule VI
• Accounts are grouped under different
heads. These are named schedules.
• Conventionally, schedules start from Share
Capital and end with Current liabilities &
Provisions in case of Balance Sheet, and
start from Sales and end with interest &
Financial charges in case of Profit & Loss
Account.

16. Share Capital
• Requirements: Authorized capital: number of
shares, face value of each share.
• Issued capital: distinguish between various classes
of capital.
• Subscribed capital: distinguish between various
classes of capital.
• Shares allotted as fully paid up pursuant to a
contract without payments being received in cash.

17. Shares Capital
• Shares issued as fully paid up by way of bonus
shares. Specify the source from which bonus
shares are issued,e.g. capitalization of profits or
reserves or from Share Premium Account.
• Deduct : Calls unpaid I) by directors and ii) by
others
• Add : Forfeited shares (amount originally paidup
must be mentioned). Capital profit on reissue of
forfeited shares must be transferred to Capital
Reserves.

18. Share Capital
• Term of redemption or conversion of any
preference capital should be stated, with earliest
date of redemption or conversion.
• Any option on unissued share capital should be
specified.
• Particulars of different classes of preference shares
should be given.
• Redeemed debentures for which company has
powers to reissue, should be given.

19. Share Capital
• In case of subsidiary companies, number of shares
held by holding company and ultimate holding
company and it subsidiaries shall be separately
stated in respect of subscribed capital.
• This info. must be certified by management and
auditor need not verify correctness.
• If company’s debentures are held by nominee or a
trustee, nominal amount of debenture & amount at
which they are stated in BS, must be stated.

20. Share Capital – addl disclosures
• Money received against share warrants.
• Number of shares held by each shareholder
in excess of 5% together with their names.
• No of bonus shares / shares allotted without
payment being received in cash / shares
bought back during the 5 years immediately
preceding the date of B/S.

21. Share Capital – addl disclosures
• Rights, preferences and restrictions
attaching to each class of shares including
restrictions on distribution of dividends and
repayment of capital.
• These disclosures w.e.f. 1st
April, 2011.

22. Reserves and Surplus
• 1. Capital Reserves
• 2. Capital Redemption Reserves
• 3. Securities Premium Account, showing
details of utilization and the year of
utilization.
• 4. Other reserves, specifying the nature of
each reserve and the amount.

23. Reserves and Surplus
• Deductions: Debit balance in Profit and
Loss Account, if any. Deduction from
uncommitted reserves only.
• 5. Surplus in Profit and Loss Account, after
providing for proposed allocation, namely
dividend, bonus and reserves.
• 6. Proposed addition to reserves
• 7. Sinking Funds

24. Reserves and Surplus
• Additions and deductions since last balance sheet
should be shown under each head.
• The word ‘Fund’ should be used only where such
reserve is specifically represented by earmarked
investments.
• Where any amount is retained by way of
providing for any known liability, and is in excess
in the opinion of the BoD, such excess shall be
treated as ‘reserve’.

25. Reserves and Surplus
• “Capital reserve” shall not include any
reserve free for distribution and “revenue
reserve” shall mean all reserves, which are
not “capital reserves”.
• “Reserve” shall not include any
“provision”, provision cannot be grouped
under shareholders’ funds.

26. Reserves &Surplus - disclosures
• Share Option Outstanding Account to be
shown under Reserves and Surplus.
• Debit Balance in PLA/c. needs to be shown
as a negative figure under “Surplus”.
Hence, Reserves & Surplus may have a
negative figure.
• W.e.f.1st
April, 2011.

27. Deferred Tax Liability
• If amount of deferred tax liability is more
than amount of deferred tax asset, latter can
be shown as a deduction and net amount of
liability be shown.

28. Secured Loans
• 1. Debentures
• 2. Loans and advances from Banks
• 3. Loans and advances from subsidiaries
• 4. Other Loans and Advances
• Loans from directors and managers should
be shown separately.
• ‘Manager’ here is a ‘manager’ appointed
under Companies Act.

29. Secured Loans
• Nature of security offered for loans should be
specified.
• Interest accrued and due should be included under
appropriate sub-heads.
• Where loans have been guaranteed by director or
manager or any other person, it should be stated
under each sub-head and also aggregate amount of
such loans and guarantees provided.

30. Unsecured Loans
• 1. Fixed Deposits, 2. Loans and Advance from
subsidiaries, 3. Short term loan and advances i)
from Banks and ii) from others, 4. Other Loans
and Advances I) from Banks, and ii) from others.
• All disclosure requirements mentioned under
‘Secured Loans’ will also apply to ‘Unsecured
Loans’. Disclosure of guarantee amount does not
apply to Fixed Deposits.

31. Borrowings –Long &Short Term
• Long term borrowing be shown under Non-
Current Liabilities and short term
borrowing under current liabilities, with
disclosure of secured or unsecured loans.
• Current maturities of long term debt,
interest accrued and due and interest
accrued but not due on borrowings be
shown under current liabilties.

32. Borrowings –Long & Short Term
• Terms of repayment of loans
• Period and amount of continuing default as
on B/S date in repayment of loans and
interest shall be specified separately in each
case.
• Loans and advances taken from related
parties.
• Disclosure w.e.f. 1st
April, 2011.

33. Current Liabilities
• 1. Acceptances
• 2. Sundry Creditors: i) total outstanding dues of
small industrial undertakings, ii) total outstanding
dues of creditors other than small scale industrial
undertakings.
• 3. Subsidiary companies
• 4. Advance payments and unexpired discounts for
the portion for which value has still to be given.

34. Current Liabilities
• Advance payments and Unexpired portion
of discounts will apply to companies in the
business of Newspapers, Fire Insurance,
Theatre, Clubs, Banking, Steamship
companies, etc.
• 5. Unclaimed dividends
• 6. Other liabilities

35. Current Liabilities
• In case of small scale industrial
undertakings to whom company owes any
sum together with interest outstanding for
more than 30 days are to be disclosed.
• 7. Interest accrued, but not due on loans.
• “Liability” shall include all liabilities in
respect of expenditure contracted for and all
disputed or contingent liabilities.

36. Current Liabilities
• Trade Payables
• Income received in advance
• W. e. f. 1st
April, 2011

37. Non-Current Liabilities
• Trade payables
• Income received in advance
• Disclosure w.e.f. 1s April, 2011.

38. Provisions
• 8. Provision for taxation
• 9. Proposed dividend
• 10. For contingencies
• 11. Provident Fund Scheme
• 12. For insurance, Pension and similar staff
benefit schemes.
• 13. Other provisions

39. Provisions
• “Provision” means any amount written off
or retained by way of providing for
depreciation, renewals or diminution in
value of assets, or retained by way of
providing for any known liability of which
amount cannot be determined with
substantial accuracy.

40. Provisions
• Short term provisions and long term
provisions, providing details of provision
for employee benefits and others –
disclosure w.e.f. 1st April, 2011.

41. Fixed Assets
• Expenditure to be distinguished between:
• 1. Goodwill, 2. Land, 3.buildings, 4.
Leaseholds, 5.Railway-sidings, 6. Plant and
machinery, 7. Furniture & fittings, 8.
Development of property, 9. Patents, trade
marks and designs, 10. Live stock, and, 11.
Vehicles.

42. Fixed Assets
• Original cost, additions and deductions during the
year, depreciation provided or written off till end
of the year under each subhead of asset should be
shown.
• Where original cost could not be ascertained,
without unreasonable expense or delay, valuation
shown by the books shall be given (after providing
depreciation – net amount). Where asset is sold,
gross block & accumulated depn. shall be shown
as a deduction.

43. Fixed Assets
• Where sums have been written off on a
reduction of capital or a revaluation of
assets, every balance sheet subsequent to
reduction or revaluation shall show reduced
figure with date of reduction in place of
original cost, for 5 years. Even when
increase in value is made, similar disclosure
should be made for 5 years.

44. Fixed Assets
• Where fixed assets have been acquired from
a foreign country, and in consequence of a
change in rate of exchange at any time after
acquisition, there has been increase or
reduction in liability for payment to supplier
or for loan raised for the purpose of
acquisition, such difference should be
adjusted to the original cost of the asset.

45. Fixed Assets
• Shown under Non-Current Assets.
• Bifurcate into Tangible and Intangible
Assets.
• Intangible asses under development.
• Discloure requirement w.e.f. 1st
April, 2011.

46. Capital Commitments
• In the erstwhile Schedule VI, details of
capital commitments were required to be
disclosed. Under revised Schedule VI, all
commitments need to be disclosed.
• W.e.f. 1st
April, 2011.

47. Investments
• 1. Investment in Govt. or Trust securities
• 2. Investments in shares, debentures and bonds,
showing separately fully paid or partly paid
shares,etc. distinguishing different classes of
shares, and investment in subsidiaries.
• 3. Immovable properties
• 4. Investment in capital of partnership firms.
• 5. Balance of unutilized money raised by issue.

48. Investments
• Show nature of investments and mode of
valuation, e.g. cost or market value.
• Aggregate amount of company’s quoted
investments and their market value.
• Aggregate amounts of company’s unquoted
investments.
• How unutilized moneys from public issue
have been invested.

49. Investments
• Should be classified as “trade” & “other”
investments. Names of bodies corporate
should be shown and in case of corporate
bodies under same management, those
should be separately shown. Nature and
extent of investments in each body
corporate, including purchases and sales
should be shown. (This is not applicable for
investment companies.)

50. Investments
• In case of investment in capital of
partnership firm, names of firms with names
of all partners of firm, total capital, and
shares of each partner should be given.
• “Quoted investment” means investment for
which permission has been given by any
stock exchange for dealing in SE.

51. Investments – Addl. Disclosures
• W.e.f. 1st
April, 2011: 1.Current and Non-
current investments be sown separately
under current assets and non-current assets
respectively. 2. Investment in capital of
partnerships – names of the firm, names of
partners, total capital and share of each
partner. 3. Provision for diminution in
value –current & non-current investments.

52. Investments – Addl. Disclosures
• W.e.f. 1st
April, 2011:
• Under each class of investment, names of
body corporate, whether subsidiary,
associates, joint ventures, controlled special
purpose entities, in whom investments have
been made and nature and extent of
investment made in each such body
corporate, showing partly paid investments.

53. Investments – Disclosures
• These disclosures no more required.
• W.e.f. 1st
April, 2011, information on
investments purchased and sold during
the year are not required to be given.
• Similarly, investments in companies
under same management – not required
to be given.

54. Current Assets
• 1.Interest accrued on investments.

55. Current Assets - Inventories
• 2. Stores and spare parts
• 3. Loose tools
• 4. Stock-in-trade
• 5. Work-in-process
• Mode of valuation, including work-in-
progress, shall be stated.

56. Current Assets – Stock-in-Trade
• Stock-in-Trade, in respect of goods
acquired for trading purposes, separately
from other finished goods (manufactured
goods).
• Goods-in-Transit under relevant sub-head
of inventories.

57. Current Assets – Sundry Debtors
• 6. Sundry debtors – Debts outstanding for
more than 6 months and Other debts.
- Debts considered good and secured,
- Debts considered good but company does
not hold any security, other than personal
security of debtor,
- Debts considered doubtful or bad.

58. Sundry Debtors
• Debt due by directors or other officers or any of
them either severally or jointly with any other
person.
• Debts due by firms and private companies in
which any director is a partner or a director or a
member.
• Debts due from other companies under same
management, with names of companies – this is
not required to be given from 1st
April, 2011.

59. Sundry debtors
• Maximum amount due by director any time
during the year.
• Provision should not exceed the amount of
debts considered doubtful or bad. Excess
provision should be transferred to ‘Reserves
and Surplus’ under separate head ‘Reserve
for Doubtful or Bad Debts.’).

60. Trade Receivables
• Trade Receivables is defined as “dues
arising from goods sold or services rendered
in the normal course of business.” Hence,
amounts due on account of other
contractual obligations, which were earlier
included under Sundry Debtors, can no
longer be included in the Trade
Receivables.
• W.e.f. 1st
April, 2011.

61. Trade Receivables
• Aggregate amount of Trade Receivables
outstanding for more than 6 months from
the date they became due to be shown
separately, as against past requirement of
disclosing debtors outstanding for more
than 6 months from the invoice date.
• W.e.f 1st
April, 2011.

62. Trade Receivables
• Long Term Trade Receivables, including
Trade Receivables on deferred credit terms,
be shown under Other Non-Current Assets.
• W.e.f.1st April, 2011.

63. Current Assets – Cash & Bank
Balances
• 7A. Cash balance on hand,
• 7B.Bank balances:
• i) with scheduled banks, ii) with others.
• Balance with banks in current accounts, call
accounts, deposit accounts.
• Names of bankers other than scheduled
banks, and balances lying with each.
• Scheduled bank, as declared by RBI.

64. Cash and Bank Balances
• Cash and Cash equivalents should be
shown.
• W.e.f. 1st
April, 2011.

65. Bank balances
• Maximum amounts outstanding at any
time during the year, with each non-
scheduled bank – names, balances and
maximum amount, etc - requirement
deleted from 1.4.2011.
• Nature of interest of any director or his
relative in each bank other than scheduled
bank. Any unused money out of proceeds
of public issue, and how invested?

66. Current Assets – Loans &
Advances
• 8.(a) Advances and Loans to subsidiaries
(b) Advances and loans to partnership firms in
which company or any of its subsidiaries is a
partner.
• 9. Bills of Exchange
• 10. Advances receivable in cash or in kind or for
value to be received, e.g. rates, taxes insurance etc.
• 11. Balance with customs, Port Trust etc. (where
payable on demand)

67. Current Assets – Loans &
Advances
• Instructions regarding “Sundry Debtors”
apply to “Loans & Advances” also.
• Amounts due from other companies
under same management, with names of
companies, the maximum amount due
from everyone of these at any time
during the year – deleted from 1st
April,
2011.

68. Current Assets - Loans and
Advances
• Current accounts with Directors and Manager,
whether debit or credit, shall be shown separately.
• If any of the current assets, loans & advances do
not have value on realization, in ordinary course
of business, at least equal to the amount they are
shown in balance sheet, the fact that BoD is of that
opinion shall be stated. (upto 31st
March, 2011)
• Loans and Advance provided to related parties –
long term and short term – w.e.f. 1st
April, 2011.

69. Current Assets – Loans &
Advances
• Capital advances to be shown under the
head “Long Term Loans and Advances”.
• Security Deposits to be disclosed as “Long
Term Loans and Advances” under the head
“Non-Current Assets”.
• W. e. f. 1st
April, 2011.

70. Deferred Tax Asset
• If amount of deferred tax asset is more than
amount of deferred tax liability, latter can
be shown as a deduction and net amount of
Deferred Tax Asset be shown.

71. Misc.Expenditure–not written off
• 1. Preliminary expenses.
• 2. Expenses including commission or
brokerage or underwriting commission for
subscription of shares or debentures.
• 3. Discount allowed on the issue of shares
or debentures.
• 4. Interest paid out of capital during
construction period, stating rate of interest.

72. Misc.Expenditure-not written off
• 5. Development expenditure not adjusted.
• 6. Other sums specifying nature.

73. Dr. Balance in Profit & Loss A/c.
• Debit balance of Profit and Loss Account
after deducting uncommitted reserves, if
any, should be shown as net amount carried
forward.
• As per Revised Schedule VI, debit balance
in PL A/c. needs to be shown as a negative
figure under “Surplus.” Hence, Reserves
and Surplus can have a negative balance.

74. Contingent Liabilities
• 1. Claims against the company, not
acknowledged as debts.
• 2. Uncalled liability on shares partly paid.
• 3. Arrears of fixed cumulative dividends
• Period for which dividends are in arrears to
be shown for each class of share separately.
Gross amount (before TDS, if any) and if
tax-free, such fact should be stated.

75. Contingent Liabilities
• 4. Estimated amount of contracts remaining to be
executed on capital account and not provided for.
• 5. Other moneys, for which contingently liable.
• Guarantees provided by company on behalf of
directors or other officers shall be stated with
amount and general nature of guarantees.
• Note: Contingent liabilities can be given as a
footnote to Balance sheet or under ‘Notes to the
Accounts.’

76. Capital & Other Commitments
• W.e.f. 1st April, 2011
• In the erstwhile Schedule VI, details of
capital commitments were required to be
disclosed. Under revised Schedule VI, all
commitments need to be disclosed.

77. Notes to Accounts
• Info. required to be given in schedules, can
be given in a separate schedule called
‘Notes to Accounts’ with cross reference of
note number to schedule number and
schedule number to note number.
• Management reply and explanation to
auditors’ observations can be put under
‘notes to accounts’.

78. Rounding off
• Condition and Rules for Rounding off:
• Turnover less than Rs.100 crores - Nearest
hundreds or thousands, or decimals.
• Rs.100 – 500 crores - Nearest hundreds,
thousands, lakhs or millions, or decimals.
• Rs.500 crores & above - Nearest hundreds,
thousands, lakhs, millions, or crores, etc.

79. B/S Abstract & General
Business Profile
• Schedule VI – Part IV requires following
info. to be given:
• 1. Regn. details: No., state code, BS date.
• 2. Capital raised during the year – public
issue / rights issue / bonus issue / private
placement.
• 3. Position of Mobilization and Deployment
of Funds: total assets and total liabilities

80. Balance Sheet Abstract
• Sources of funds: Paid up capital, Reserves
& Surplus, Secured Loans and Unsecured
Loans.
• Application of Funds: Net Fixed Assets,
Investments, Net Current Assets, Misc.
Expenditure, Accumulated losses.
• This is deleted from 1st
April, 2011 and no
more applicable.

81. Performance of Company
• Turnover, Total expenditure, Profit before tax,
Profit after tax, Earning per share, Dividend@ %.
• Generic Names of 3 Principal Products / Services
of the Company (as per monetary terms) – Item
Code no. (ITC) Code and Product description.
• ITC – Indian Trade Classification, based on
harmonized commodity description and coding
system, by Ministry of Commerce, Directorate
General of Commercial Intelligence & Statistics.

82. Company with subsidiaries
• Section 212 requires that the following
info.must be given by holding company:
• Name of the subsidiary companies
• Financial year ending on (date)
• Number of shares held by holding company
in subsidiary company – specify equity or
preference or other type of shares and
nominal value

83. Subsidiary companies
• The net profit or loss of subsidiary so far as
it concerns members of holding company
• a) dealt with in accounts of holding
company (amounts) : for the financial year
and for previous financial year
• b) not dealt with in accounts of holding
company (amounts) : for the financial year
and for previous financial year.

84. Subsidiary companies
• Changes in interest of holding company during the
financial year.
• Number of shares held.
• Material changes between two financial years: (for
example):
• Fixed assets (net additions), Investments
• Moneys lent by subsidiary to holding co.
• Money borrowed by subsidiary from holding
company.

85. Companies which have issued
ADR or GDR
• In case of companies which have issued
ADR or GDR, accounts are prepared as
required by US GAAP or UK GAAP or
GAAP applicable in that country and
amounts may be given US $ in million or
US $ billion or in GB Pounds in million or
billion or in currency of that country.
• Form F (Securities Exch.Com.in USA)

86. Other requirements
• In case of companies listed in stock
exchanges, many other disclosure
requirements as per various clauses of
listing agreement will have to be
additionally printed and published for
information of investors. Banking, SEB,
Insurance & such other companies will have
to follow formats prescribed by regulatory
bodies.

87. Schedule VI – Part II
• Profit & Loss Account (PL) shall set out various
items relating to income and expenditure arranged
under most convenient heads and shall disclose
the following information.
• PL shall be made out as to clearly disclose result
of working of company and shall disclose every
material feature – credits and debits or expenses of
transactions of non-recurring or exceptional
nature.

88. Profit & Loss Account -
Turnover
• The aggregate amount for which sales are
effected, giving sales of each class of goods dealt
by company, giving quantities of sales of each
class separately.
Excise duty on manufactured goods and sales
returns are deducted from Gross Sales / Turnover
and sales, net of returns and excise duty, will have
to be shown. Excise duty cannot be shown as
expenditure in PL.

89. Turnover
• If company has more industrial licenses, for
different products, categorization of turnover will
be as per licenses.
• If company has many licenses for same product,
sales of all such factories can be combined
together under one class of product. Where
turnover of one class of product does not exceed
10% of total turnover, those products can be
combined and shown under ‘others’ with or
without quantity.

90. Revenue from operations
• In case of companies other than finance
companies, revenue from operations need to
be disclosed separately as revenue from:
• (a) sale of products
• (b) sale of services, and
• © other operating revenues.
• W.e.f. 1st
April, 2011.

91. Limit for disclosure
• Any item of income / expense which
exceeds one per cent of the revenue from
operations or Rs.1,00,000/- which ever is
higher, be disclosed separately.
• W.e.f. 1st
April, 2011

92. Income from Services
• In case of company providing or rendering
services, gross income derived should be
shown.
• Suitable and appropriate classification of
services can be done and income reported
for each class of service.

93. Other income
• Income from trade and other investments and
income tax deducted at source (TDS).
• Other income by way of interest should be shown
as gross amounts and TDS.
• Dividend from subsidiary companies, & TDS.
• Income from investment in partnership, & in case
of loss, whether debited to PL or not.
• Miscellaneous income. W. e. f. 1st
April, 2011,
disclosure of TDS amount is not required.

94. Expenses
• Expenses in the Statement of Profit and
Loss to be classified on the basis of nature
of expenses.
• W.e.f.1st
April, 2011

95. Material Consumption
• In case of manufacturing companies, value
of raw material consumed, giving item-wise
break up and indicating quantities. Basic
and important raw materials shall be shown.
In case of other items, such as intermediates
and components, individually not forming
value more than 10% of total, can be
shown (total value) without indicating
quantities.

96. Revised Schedule VI(w.e.f 1st
April, 2011)
• Disclosure requirements relating to break-
up in terms of quantitative disclosures for
significant items of Profit & Loss A/c. such
as raw material consumption, stocks,
purchases & sales have been simplified and
replaced with the disclosure of Purchases,
Sales, Consumption of Raw Materials,
Gross Income from Services, and Work-in-
Progress under “broad heads” only.

97. Revised Schedule VI(w.e.f 1st
April, 2011)
• The determination and identification of
such broad heads needs to be done based on
materiality and presentation of true and fair
view of the financial statements.

98. Work-in-progress or
work-in-process
• Amount of WIP completed at the
commencement and at the end of the year.
• This is shown as “Increase or decrease in
Work-in-process”.
• Some companies show increase / decrease
in WIP along with increase / decrease in
finished goods stock.

99. Goods purchased for Trading
• Purchases made, opening and closing
stocks, giving break up of each class of
goods, traded in by the company indicating
quantities should be shown.

100. Manufacturing expenses
• Consumption of stores and spare parts
• Power and fuel
• Job work charges or labor charges for
processing company’s materials outside
factory.

101. Employment Costs
• Salaries, wages and bonus
• Contribution to provident and other funds
• Workmen and staff welfare expenses (to the extent
not adjusted from any provision or reserve)
• No. of employees drawing salaries more than
prescribed limit (Rs.24 Lakh p.a.or Rs.2 Lakh
p.m.) and breakup of expenditure.

102. Employment Costs
• W.e.f. 1st April, 2011
• Expense on Employees Stock Option
Scheme (ESOP) and Employee Stock
Purchase plan (ESPP) to be shown
separately as part of Employee Benefits
Expense.

103. Other expenses
• Rent, repairs to buildings, repairs to machinery,
insurance, rates and taxes (excluding taxes on
income), miscellaneous expenses.
• Any individual item of expenditure exceeding one
percent of total revenue, shall be shown
separately and not combined with any other head
and shown under “Misc. Expenditure”.

104. Other expenses
• 1. Commission paid to sole selling agents
(as per section 294), if any & Commission
paid to other selling agents. 2. Brokerage
and discount on sales, other than usual trade
discount. 3.Trade discount is deducted from
sales and sales shown net of discount.
These requirements deleted from 1st
April,
2011.

105. Other expenses
• Auditors’ remuneration:
• Amounts paid to auditors as fees, expenses
or otherwise for services rendered:
• a) as auditor,
• b) as adviser in any other capacity in
respect of: - Taxation matters, company
law matters, management services & in any
other manner.

106. Adjustments relating to earlier
years (AREY)
• Bad debts written off, but recovered
subsequently.
• Extra provision for taxation of profits of
earlier years or write back.
• Write off of excess provisions or additional
provisions for earlier years’ transactions..
• This can be shown as an appropriation.

107. Managerial remuneration
• Managerial remuneration as per section 198.
• Other allowances and commission including
guarantee commission, with details.
• Any other perquisites or benefits in cash or kind,
stating approximate value, if possible.
• Pensions, gratuities, payment s from provident
funds, compensation for loss of office,
consideration for retirement from office.

108. Managerial remuneration
• Method of computation of managerial
remuneration and commission payable on net
profits of company. ‘Net profits’ in this context
means profit before tax and before debiting such
managerial remuneration to PL. Remuneration
should not exceed 5% of net profits for one whole-
time director and 11% for all directors considered
together. This is deleted from 1st
April, 2011 and
no more applicable.

109. Depreciation
• Depreciation, renewals, diminution in value
of fixed assets.
• Method adopted for providing depreciation.
• If no provision is made, state the fact and
quantum of arrears of depreciation, by way
of a note.
• Profit or loss on sale or disposal of fixed
assets or loss on impairment of fixed assets.

110. Interest and financial charges
• Interest on debentures
• Interest on fixed loans (loans for fixed
period)
• Interest payable to managing director or
manager.
• Other financial charges

111. Finance Cost (w.e.f.1st
April,2011)
• Net Exchange gain/loss on foreign currency
borrowings to the extent considered as an
adjustment to interest cost needs to be
disclosed separately as a finance cost.
• Finance cost shall be classified as Interest
expense, Other borrowing costs, and
Gain/loss on foreign currency transaction
and translation.

112. Taxation
• Charge for income tax and other tax on
profits, method of computation,
distinguishing between income tax and
other taxes (such as Fringe Benefit Tax
(FBT), Deferred Tax Expense or Deferred
Tax Income), taxes imposed elsewhere and
relief available, if any.
• Taxation provision written back, if any.

113. PL Appropriation A/c.
• Revised Schedule VI stipulates that transfer
from / to reserves have to be shown under
the heading Reserves and Surplus only.
Hence, there is no requirement of
presenting a separate Profit & Loss
Appropriation A/c.
• Changes w. e. f. 1st
April, 2011:

114. Appropriations
• Amounts reserved for repayment of
preference share capital, debentures, loans
or reserve created for the purpose.
• Amount set aside as reserves to meet any
specific liability or contingency or
commitment known to exist on date of B/S.
• Amount withdrawn from any reserve.

115. Proposed dividend
• Aggregate amount of dividends proposed,
showing interim and final dividend and
whether such dividend is subject to
deduction of income tax or not.
• Now dividend is subject to Dividend
Distribution Tax (DDT) and such DDT
payable by company is shown under
‘Taxation’.

116. Proposed Dividend
• As per Revised Schedule VI, Proposed
Dividend needs to be disclosed in the Notes
to Accounts as a commitment.
• This change w.e.f. 1st
Appril, 2011.

117. Abnormal items, etc.
• Effect of the following on PL of the company:
Abnormal items of expenditure or income, such as
loss on account of fire, loss or profit on sale of
machinery, penalty by government, etc. should be
disclosed separately.
• Non-recurring income or expenditure
• Exceptional items of income or expenditure
• Effect of changes in accounting policies.
• Effect of transactions not normally undertaken by
company.

118. Exceptional & Extra-Ord. Items
• Exceptional & Extra-Ordinary Items need
to be disclosed separately on the face of
the Statement of Profit and Loss. Details
of the same, as also of any prior period
items should be disclosed in the Notes to
the Accounts.

119. Profit/Loss on Discontinuing
Operations
• Profit / Loss before and after tax from
discontinuing operations and the tax
expense from discontinuing operations need
to be disclosed separately on the face of the
Statement of Profit and Loss.
• W. e. f .1st
April, 2011.

120. Significant Accounting Policies
• Policies followed by company and
deviations from generally accepted
accounting practices will have to be clearly
and unambiguously disclosed here, for
benefit of investors and analysts. Reasons
for deviations should be explained.

121. Additional Information
• Information which cannot be conveniently
given in PL or BS in respective schedules
are given under additional information.
• These additional information form an
integral part of PL and BS.

122. Licensed, Registered & Installed
Capacity, Production
• Licensed capacity, if license is in force.
• Registered capacity – with DGTD or any
other authority, Installed capacity.
• Actual production in quantities, for each
class of product for which license is issued
or capacity registered and installed.
• W.e.f. 1st
April, 2011, these disclosures
are not required.

123. Sales and closing stock
• Quantity and value of sales of each class of
goods, suitably classified / categorized.
• Quantity and value of closing stock of each
class of goods, suitably classified /
categorized.

124. Consumption of materials
• Break up into indigenous materials and
imported materials and respective
percentages to total consumption.

125. CIF value of imports
• Break up into:
• Raw materials,
• Components and spare parts
• Capital goods,
• CIF = Cost, Insurance, and Freight.

126. Expenditure in foreign currency
• On account of:
• Royalty,Technical know-how, Professional
consultation fees, Interest , Other matters.
• Amount remitted in foreign currency on
account of dividend to non-resident
shareholders, no.of shareholders and no. of
shares held, year for which dividend
related.

127. FOB value of exports
• Export realization after deducting freight
paid on shipment or airfreight charges,
insurance. Domestic freight from factory to
port and transit insurance need not be
deducted for FOB value.
• FOB = Free On Board

128. Earnings in foreign currency
• Royalty,
• Know-how,
• Professional and consultation fees
• Interest and dividend
• Other income, indicating nature.

129. Related party transactions
• Names of related parties and nature of
relation – subsidiary or associate company
or business entity, key management
personnel.
• Nature of transaction – purchases, sales or
expenses reimbursed, remuneration paid
• Outstanding balances at the end of the year.

130. Segment-wise information of
sales, results, capital employed
• Required to be given as per clause 49 of
listing agreement with stock exchange.
• Income and expenditure which cannot be
allocated to any segment, can be shown as
unallocated and added to or deducted from
profits to arrive at net profit.
• Same treatment to ‘capital employed’ also.

131. General instructions
• Corresponding amounts for previous year
should be given for every item of Balance
Sheet and Profit & Loss Account.
• Note should be given regarding regrouping
of accounts of previous year, to bring those
in conformity with current year’s figures.
• Place and date of signatures of directors and
auditors to financial statements.

132. Any questions ?
• If there is any variation between text book and
this presentation, text book should be followed
for the purpose of examination.
• For Indian Companies Act, text book written with
reference to Companies Act in India should be
referred ( and not any book by foreign author or
book published in foreign country).
• PPT is not a substitute for text book.
• Thank you