Financial statements

Finance (Phase -I & II) Valuation of Securities

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Financial Statements refer to a specific set of reports produced in accounting system of an entity. The objective of these reports is to provide information about the entity. A complete set of financial statements includes:

1. Income Statement:

The Income Statement, also known as Trading, Profit and Loss Account, shows the results of operations of an entity over a particular period of time. The income statement presents income and expenses and the resulting net income or loss for a particular period of time.

2. Statement of Financial Position:

A Balance Sheet presents Assets, Liabilities, and Capital of an entity as on a given point in time. The Balance Sheet shows the financial condition of a business entity at a given point of time.This report shows the entity's financial position and condition, hence, also called Statement of Financial Position. The total amount of assets should be equal to the total amount of liabilities plus capital.

Closing Entries: At the end of accounting year, all accounts relating to expenses and incomes are closed. In order to close such accounts, these are transferred to Trading Account or Profit and Loss Account. When all such accounts are transferred to Trading And Profit And Loss Account, the balance of this account will show the net profit or loss. A journal entry made for the purpose of closing an expense or income account is known as a closing entry. A principle purpose of the year end process of closing income and revenue accounts is to reduce their balances to zero.

TRADING ACCOUNT

Trading account is based on Rule of Nominal .
All direct items relating to purchase & sales of goods are shown.
The result of Trading account is either Gross profit or gross loss

TRADING ACCOUNT OF...........for the year ending 31/3/20…….

Dr. Cr.

Particulars

Amount

Particulars

Amount

To Opening Stock :

Raw Materials, Work in Progress, Finished Goods

To Net Purchases :

Raw Materials, Work in Progress, Finished Goods

Less : Purchases Returns/returns outward

To Direct Expenses :

Consumable Stores, Wages, Carriage Inward & Cartage, Manufacturing Expenses like: Coal, Water & Gas, Factory Lighting, Fuel & Power, Motive Power, Freight, Wages & Salaries, Octroi, Factory Rent & Rates, Insurance, Duty on Imported Goods, Custom Duty, Royalty on Manufactured Goods, Works Manager’s Salary, Foreman’s Salary, Other factory expenses except depreciation, repair and maintenance etc.

To Gross Profit (Bal. Fig.)

Rs.

By Net Sales/Revenue from operations:

Total sales(cash and credit)

Less : Sales Returns/Returns Inward

By Closing Stock :

Raw Materials, Work in Progress, Finished Goods

By Gross Loss (Bal. Fig.)

TOTAL

Profit and Loss Account

Is based on Rule of nominal.
All indirect expenses & incomes are shown.
The result of Profit and Loss account is either Net profit or Net loss

PROFIT AND LOSS ACCOUNT………..for the year ending 31/3/20…..........

Particulars	Amount (Rs.	Particulars	Amount (Rs.)
To Gross Loss b/d (A) ) Management/Office Expenses : Rent, Rates, Taxes and Insurance, Heating & lighting, Office Salaries & Wages, Printing and stationery, Postage and Telegrams, Telephone Charges, Legal Charges, Audit Fee, Upkeep of Motor Car, General Expenses, Conveyance Charges, repair and Maintenance, sundry expenses.		By Gross Profit b/d By Incomes: Interest (Cr.), Discount (Cr.), Commission (Cr.), Rent from Tenant, Income from Investment, Miscellaneous Receipts, Dividend on Shares(Cr.), Interest on Debentures(Cr.), Income from any other source.
(B) Selling & Distribution Expenses : Advertisement, Traveler’s Salaries and Commission, Salesmen’s Salaries & Commission, Bad Debts, Godown Rent, Export Expenses, Packing Charges, Carriage Outward, Agent’s Commission, Upkeep of Motor Lorries, discount Allowed, Delivery van Expenses, Warehouse charges, sales depot expenses.		By Net Loss transferred to Capital A/c (Balancing figure)
(C) Depreciation & amortization : Depreciation of Fixed Tangible assets, Intangible assets written off.
(D) Financial Expenses : Interest on Capital, Interest on Loans, Cost of Discounting the bills
(E) Extraordinary Expenses : Loss by fire (not covered by insurance) To Net Profit transferred to Capital A/c (Balancing figure)

Balance Sheet

Balance sheet is a statement of assets and liabilities of an enterprise at a given date. Right hand side of Balance Sheet is called the 'Assets' side having Debit Balances. Left hand side of Balance sheet is called the 'Liabilities' side having Credit balances.

‘Assets’ side – Includes Personal and Real accounts.

‘Liabilities’ side – Includes only Personal account and the Difference of Income & Expenditure.

BALANCE SHEET as on 31/3/20…………

LIABILITIES	Rs.	ASSETS	Rs.
Capital		Fixed Assets(tangible and intangible)
(+) Net Profit/(-) Net Loss		Land & Buildings
(-) Drawings		Plant & Machinery
(+)Interest on Capital		Furniture
(-) Interest on Drawings		Motor Vehicles
Long term/Non Current liabilities like Bank Loans, Mortgage etc.		Investments
Current Liabilities: Creditors, bills payable, outstanding expenses, pre received incomes, bank overdraft		Current Assets: Loans & advances, Stock/Inventory, Cash & Bank, Debtors/BR, prepaid expenses, accrued incomes

NOTE: Both the sides of B/S must tally.

CONTINGENT LIABILITIES: The liabilities which come into existence on the happening of some uncertain events. Contingent liabilities are possible future liabilities. Since, contingent liabilities are not the actual liabilities on the date of Balance Sheet, they are not included in the total liabilities. However, contingent liabilities are shown as footnotes of the Balance Sheet like liability for bill discounted, disputed liabilities pending in court, income tax under appeal.

FINAL ACCOUNTS / FINANCIAL STATEMENTS in case of a Joint Stock Company

Statement of Profit and Loss
Balance Sheet

BALANCE SHEET of Company as at 31/3/20……………(Part I, Schedule III, Companies Act, 2013)

Particulars	Note No.	At the end of Current year	At the end of Last year figures
I. EQUITY AND LIABILITIES
(1) Shareholders’ 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
II. ASSETS
(1) Non-Current assets
(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
Total

STATEMENT OF PROFIT & LOSS of Company for year ending 31/3/20…(Part II, Schedule III, Companies Act, 2013)

Particulars	Note No.	For the Current year	For the Last year
I. Revenue from operations		XXX	XXX
II. Other income		XXX	XXX
III. Total Revenue (I + II)		XXX	XXX
IV. Expenses:
Cost of materials consumed: Purchases of Stock-in-Trade Changes in inventories of finished goods, WIP and Stock-in-Trade		XXX	XXX
Employee benefits expense		XXX	XXX
Finance costs		XXX	XXX
Depreciation and amortization expense		XXX	XXX
Other expenses		XXX	XXX
Total Expenses		XXX	XXX
V. Profit before exceptional and extraordinary items and tax (III-IV)		XXX	XXX
VI. Exceptional items		XXX	XXX
VII. Profit before extraordinary items and tax (V - VI)		XXX	XXX
VIII. Extraordinary Items		XXX	XXX
IX. Profit before tax (VII- VIII)		XXX	XXX
X. Tax expense:
Current tax		XXX	XXX
Deferred tax		XXX	XXX
XI. Profit (Loss) for the period from continuing operations (VII-VIII)		XXX	XXX
XII Profit/(loss) from discontinuing operations		XXX	XXX
XIII. Tax expense of discontinuing operations		XXX	XXX
XIV. Profit/(loss) from Discontinuing operations (after tax) (XII-XIII)		XXX	XXX
XV. Profit (Loss) for the period (XI + XIV)		XXX	XXX

FINAL ACCOUNTS/FINANCIAL STATEMENTS of a Bank

Balance Sheet
Profit and Loss account

BALANCE SHEET of a Bank as on 31/3/20…

Particulars	Schedule No.	At the end of Current year	At the end of Last year figures
I. LIABILITIES
Capital	1
Reserves and Surplus	2
Deposits	3
Borrowings	4
Other Liabilities	5
Total
II. ASSETS
Cash in hand and with RBI	6
Balance with other banks and money at call and short notice	7
Investments	8
Advances	9
Fixed assets	10
Other assets	11
Total

Foot notes: Contingent liabilities Sch. 12

STATEMENT OF PROFIT AND LOSS of Bank for year ending 31/3/20…..

Particulars	Schedule No.	For the Current year	For the Last year
I. INCOMES:		XXX	XXX
Interest earned	13	XXX
Other incomes	14	XXX
Total Incomes
II. EXPENSES:
Interest expanded	15	XXX	XXX
Operating expenses	16	XXX	XXX
Provisions and Contingencies	---	XXX	XXX
Total Expenses		XXX	XXX
Net Profit after Tax (I-II) Profit of Last year (b/f) Appropriation: Statutory Reserve – 20% of NPAT –section 17 0f BRA,1949 --25% of NPAT as per RBI circular Other reserves Balance as Surplus to Balance Sheet		XXX	XXX