FINAL ACCOUNTS OF COMPANIES

As per Sec. 209 of Indian Companies Act, every company

is to prepare its Profit & Loss A/c and Balance sheet at the
end of the every financial year as per Schedule VI of the
ICA.

Procedures of Maintenance of Books : Sec. 209, proper

books of accounts at its registered office. If at
preparing these are any other place then information to Registrar.
stated in Sec. 211 Last 8 years records with vouchers and true &
fair view otherwise fine up to Rs. 1000 and
No Trading Account. imprisonment up to 6 months. Books are
opened to inspection during business hours by
Trading Account the Registrar / officer authorised by the
items will go to Profit Central Govt.
& Loss Account
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 Annual Accounts

Profit & Loss Balance Sheet

A/c

Sec. 211 1. Profit & Loss A/c as per

Schedule VI ± Part II
True and Fair 2. Balance Sheet as per Schedule
VI ± Part I
View of the
state of the
affairs of the Person fails to the above
compliance imprisonment
company may extend to 6 months or
with fine which may extend to
Rs. 1000. Imprisonment only
if he has committed willfully.

 


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 Legal Requirements

Sec. ± 211 : True and Fair View of the state of the affairs of the company. Every
P&L A/c & B/s should comply with the Accounting Standards issued by the
ICAI. If any deviation then disclosure of its reason and financial effect.

Sec. ± 212 : The Holding company will attach following documents with its
Balance Sheet :
a) A copy of the Balance Sheet of the subsidiary
b) A copy of its Profit & Loss Account
c) A copy of the report of its BOD
d) A copy of the Auditor¶s Report
e) A statement of the holding¶s company¶s interest in the subsidiary.
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 Legal Requirements

Sec. ± 215 : After approval of Accounts by BOD, it must be signed by its

manager or secretary, if any, and not less than two directors of the company, one
of whom should be a managing director.

Sec. ± 216 : The Profit & Loss A/c must be annexed to the B/s and the Auditor¶s
Report should be attached there to.

Sec. ± 217 : A report by the BOD be attached to the B/s. The report should deal
with the following:
a) The state of the company¶s affairs
b) The amounts, if any, which it proposes to carry to any reserves in the B/s.
c) The amount, if any, which it recommends should be paid by way of dividend
d) Material Changes and commitments V




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 Legal Requirements
Sec. ± 217 (2AA) : The Board report shall include a Director¶s Responsibility
Statement, indicating therein :
a) That in the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures.
b) That the directors had selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
company and Profit & Loss A/c at the end of the financial year.
c) That the directors have taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of this Act
for safeguarding the assets of the company and for preventing and detecting
fraud and other irregularities.
d) That the directors had prepared the annual accounts on a going concern
basis.
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 Legal Requirements
Clause 49 (V) of the Listing Agreement (Agreement between a listed company &
stock exchange, effective from Jan. 1, 2006) requires that the CEO and CFO
of the company shall certify to board that :
a) They have reviewed the financial statements and the cash flow statements and
to the best of their knowledge and belief these statements are true.
b) There were no fraudulent or illegal transactions or transactions violative of
the Company¶s Code of Conduct.
c) They accept the responsibility of internal control.
d) They have indicated to the auditors and audit committee significant changes
in internal control as well as in Accounting Policies during the year.
e) They have indicated to the auditors and audit committee instances of fraud of
which they had become aware.

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 Condition for Declaration of Dividend
As per the provisions of Companies (Transfer of Profit to Reserve) Rules, 1975
framed by the Central Government, no dividend can be declared or paid by the
company for any financial year out of the profits of the company for that year
unless it transfers a percentage of its profit for that year to reserves as specified
below:

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 The following is the Trial Balance of AB Ltd. as on March 31, 2005. AB Ltd.
was registered with a nominal capital of 100000 shares of Rs.10 each.
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The following is the Trial Balance of BEE Ltd. as on March 31,
2005 :
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508000 508000
 Assignment
The Auto Parts Mfg. Co. Ltd. was registered with an authorised capital of Rs.10,00,000
divided into shares of Rs.10 each, of which 40000 shares had been issued and fully paid.
The following is the Trial Balance extracted on 31st March, 2005 :
Particulars Dr. Cr. Particulars Dr. Cr.
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