The joint stock companies, are legally required to prepare a set of
financial statements to periodically assess the profits earned and to know the financial position of the company as on a specified date. Thus, like other business enterprises, a limited company prepares the Income Statement and the Balance Sheet at the close of accounting year. However, in the case of companies registered under the Companies Act, the Act specifies that the books of accounts be maintained and also prescribes the format and contents in which financial statements are to be prepared. In addition to this, the Act provides that accounts must be audited by an external person called the auditor and the auditor has to submit its report in the prescribed format to the shareholders.
Since the owners or shareholders elect Board of Directors to manage
company affairs and rely on the ability and skills of these directors to conduct the business in the most profitable manner, the Companies Act tries to protect the shareholders interest by prescribing a set of convents according to which the financial statements are to be prepared and presented to the shareholders. The objective of the Companies Act in laying down various provisions with regard to accounts and audit is to ensure that adequate information is provided to the shareholders in order for them to judge the performance of the directors during an accounting period. The legal requirements laid down by the Companies Act therefore, assume a great importance in the preparation of the financial statements of a joint stock company. It is further relevant to point out here that the general principles for the preparation of profit and loss account and balance sheet of a company are the same as applicable to a sole proprietor/partnership business except that in case of a company these are prepared as per the set proforma with details as given in the Act. Whereas in case of individual proprietor or partnership no proforma has been prescribed. In case of a company accounts, relevant provisions of the companies law are to be taken care of.
9.1 GENERAL REQUIREMENTS OF COMPANIES ACT
Books of Accounts
Section 209 of the Companies Act prescribes for the maintenance
of books of accounts by a company. According to this section, every company should keep at its registered office proper books of accounts with respect to : (a) all sums of money received and expended by the company and the matters in respect of which the receipt and expenditure take place (b) all sales and purchases of goods by the company (c) the assets and liabilities of the company.
Further, in the case of companies which are engaged in manufacturing,
production, processing or mining activities, in addition to the financial accounts mentioned above, a set of cost accounts (if prescribed by the Central Government) must be maintained to show the utilization of material, labour and other items of cost.
This section also specifies that a company will not be deemed to be
maintaining proper books of accounts unless,
- all books necessary to give a true and fair view of the state of affairs of the company and to explain the transactions are maintained, and
- the books of accounts are maintained on accrual basis and according to the double entry system of accounting.
Preparation of Final Accounts
From sections 210-233 of the Companies Act deal with those
provisions which have bearing on the preparation, presentation and publication of final accounts of a company. A brief description of these provisions is as follows:
- Section 210 deals with the preparation and presentation of the final accounts of a company at its annual general meeting.
- Section 211 prescribes ‘form’ and ‘contents’ of the Balance Sheet and Profit and Loss Account.
- Section 212 provides for disclosure of certain details in the Balance Sheet of a holding company in respect of its subsidiaries.
- Section 213 provides for the financial year of the holding company and subsidiary company.
- Section 214 makes provisions regarding the rights of the representatives of the holding company to inspect books of account kept by any of its subsidiaries.
- Section 215 provides that the Balance Sheet and Profit and Loss Account of a company shall be authenticated (signed) on behalf of the board of directors by its manager or secretary, if any, and by not less than two directors of the company, one of whom shall be a managing director, where there is one.
- Section 216 provides that the Profit and Loss Account shall be treated as an annexure to the Balance Sheet and auditor’s report as an enclosure thereto.
- Section 217 provides that the report of the board of directors should be attached to every Balance Sheet laid before the shareholders at one general meeting.
- Section 218 provides for penalty for improper issue, circulation or publication of Balance Sheet or Profit and Loss Account.
- Section 219 deals with the right of the members to copies of Balance Sheet and Profit and Loss Account, auditor’s report and every other document required by law to be annexed or attached to the Balanced Sheet which is to be presented in the general meeting.
- Section 220 provides that three copies of Balance Sheet and Profit and Loss Account have to be sent to the registrar within 30 days after an annual general meeting.
- Section 221 prescribes for giving details of the payments made to any director or other person, any other company, body corporate, firm or person.
- Section 222 provides that where any information which is required to be given in the accounts and is allowed to be given in the statement annexed to the accounts, it may be given in the board’s report instead of in the account. Such a report of the directors shall be treated as an annexure to the accounts and the auditors shall report thereon only in so far as it gives the said information.
- Section 223 deals with certain companies like banking company, insurance, company, etc. who are required as per this section, to publish a statement in the form in Table F in Schedule I of the Companies Act.
The Companies Act further specifies the following with regard to
the annual accounts to be drawn up by a company :
- At every annual general meeting of the shareholders, the board of directors of the company should lay before the shareholders, a Balance Sheet as at the end of the accounting period which has just ended and also a Profit and Loss Account for such accounting period.
- The annual accounts of the company must be submitted in an annual general meeting within six months counted from the last day of the accounting period to which the accounts relate.
The periods to which the accounts relate is known as the financial
year and it may be less than, equal to or greater than 12 months but cannot exceed 15 months. Where special permission has been granted by the registrar, the financial year may be extended to eighteen months.
9.3 FORM AND CONTENTS OF PROFIT AND LOSS ACCOUNT
The Companies Act, 1956, has not prescribed any standard format in
which this account is to be presented. Section 211 (2) simply states that it will contain such information which may help in disclosing a true and fair view of the operations of the company and shall comply with the requirements of Part II Schedule VI so far as they are applicable thereto. The Profit and Loss Account should also disclose every material feature, including credits or receipts and debits or expenses in respect of non-recurring transactions or transactions of an exceptional nature. Various items of receipts and expenses should be arranged under the most convenient heads. The legal requirements with regard to Profit and Loss Account are summarised below :
With respect to revenues received by a company, the following are required to be shown as per Part II of Schedule VI :
- The turnover or the aggregate amount of sales effected by the company. If more than one class of goods have been sold by the company, then the amount of sales in respect of each class of goods sold along with details of quantities sold should be disclosed.
- In the case of companies rendering or supplying services, the gross income derived from services rendered or supplied.
- Amount of income from investment distinguishing between trade
investments and other investments
- Other income, specifying the nature of income.
- Profits on investments.
- Profits (which are material in amount) in respect of transactions which are of a kind not usually undertaken by the company or undertaken in circumstances of an exceptional or non-recurring nature.
- Miscellaneous income.
- Dividends from subsidiary companies.
The following are the expenses which must be disclosed in the Profit
and Loss Account :
- In the case of manufacturing companies, the value of the raw materials consumed, giving item-wise break-up and the quantities consumed. While giving this break-up, as far as possible, all important basic raw materials should be shown as separate items. In the case of intermediates or components procured from other manufacturers are consumed, if the number of items are too many to be included in the break-up, then such items should be grouped under suitable headings without mentioning the quantities. However, all those items which in value individually account for 10 per cent or more of the total value of the raw material consumed should be shown distinctly in the break up with details of quantities consumed.
- In the case of manufacturing companies, the opening and closing stock of goods produced, giving break-up in respect of each class of goods indicating the quantities of each class of goods produced.
- In the case of trading companies, the value of purchases made and of the opening and closing stocks. This information should be provided in respect of each class of goods traded by the company. The quantity details should also be provided.
- If a company is both a manufacturing and a trading company, it is sufficient if the total amounts are shown in respect of the opening and closing stocks, purchases, sales and consumption of raw material with value and quantity details.
- In the case of companies having works in progress, the opening and closing values of the works in progress.
- The amount provided for depreciation, renewals or diminution in value of fixed assets. If no provision has been made for depreciation, this fact should be stated and the quantum of arrears of depreciation should be disclosed by way of a note.
- Consumption of stores and spare parts.
- Power and fuel.
- Repairs to buildings.
- Repairs to machinery.
- Salaries, wages and bonus.
- Contribution to provident fund and other funds.
- Workmen and staff welfare expenses.
- Rates and taxes, excluding taxes on income.
- Miscellaneous expenses. Any item under which expenses exceed one per cent of the total revenue of the company or Rs. 5,000, whichever is higher, must be shown as a separate and distinct item against an appropriate account head in the Profit and Loss Account and should not be combined with any other item and shown under this head of ‘Miscellaneous Expenses’.
- Losses on investments.
- Losses on transactions which are of a kind, not usually undertaken by the company or undertaken in circumstances of an exceptional or non-recurring nature.
- The amount of interest on the company’s debentures and other fixed loans stating separately the amount of interest, if any, paid or payable to the managing director or manager.
- The amount of income tax payable.
- The aggregate amount of the dividends paid, and proposed, and stating whether such amounts are subject to deduction of income-tax or not.
- Provisions for losses of subsidiary companies.
- Amounts reserved for repayment of share capital and repayment of loans.
- Any material amounts set aide to reserves, but not including provisions made to meet any specific liability, contingency or commitment. Any material amounts withdrawn from such reserves.
- Any material amounts set aside to provisions made for meeting specified liabilities, contingencies or commitments. Any material amounts withdrawn form such provisions, as no longer required.
In addition to the above expenses, expenses relating to sales, such as
commission paid to sole selling agents and other selling agents, brokerage and discount on sales, other than the usual trade discount should also be shown separately.
The amount by which any items shown in the Profit and Loss Account
are affected by any change in the basis of accounting, if material, should be disclosed separately.
In respect of all items shown in the Profit and Loss Account, the
corresponding amounts for the immediately proceeding financial year should also be given.
Notes to Profit and Loss Account
According to Part II of Schedule VI, certain information has to be
provided by way of notes to Profit and Loss Account. The information to be so provided is outlined below :
- The following payments provided or made during the financial year to the directors (including managing directors or manager, if any, by the company, the subsidiaries of the company and any other person) :
- Managerial remuneration paid or payable under Section 198 of the Companies Act.
- Other allowances and commission including guarantee commission.
- Any other perquisites or benefits in cash or in kind (stating approximate money value where practicable).
- Payments from provident funds, in excess of own subscriptions and interest thereon.
- Compensation for loss of office.
- Consideration in connection with retirement from office.
If commission is payable to the directors including managing director
or manager as a percentage of profits, then the notes should give a statement showing the computation of net profit in accordance with the Act and also gives details of the calculation of such commission.
- The notes should contain detailed information with regard to amounts paid to the auditor, whether as fees, expenses or otherwise for services rendered. These payments should be classified into payments received by the auditor as :
- As adviser, or in any other capacity, in respect of
- taxation matters
- company law matters (iii) management services, and
- In any other manner.
- In the case of manufacturing companies, the notes should give detailed quantitative information in respect of each class of goods manufactured with regard to the following :
- The licensed capacity (where license is in force)
- The installed capacity and
- The actual production
- The notes to the Profit and Loss Account should also contain the following information :
- Value of imports calculated on C.I.F. basis by the company during the financial year in respect of :
- raw materials
- components and spare parts
- capital goods.
- Expenditure in foreign currency during the financial year on account of royalty, know-how, professional consultation fees, interest and other matters.
- Value of all imported raw materials, spare parts and components consumed during the financial year and the value of all indigenous raw materials, spare parts and components similarly consumed and the percentage of each of total consumption
- The amount remitted during the year in foreign currencies on account of dividends, with a specific mention of the non-resident shareholders and the number of shares held by them on which dividends were paid.
- Earnings in foreign exchange classified under the following heads, namely:
- Export of good calculated in F.O.B. basis
- Royalty, know-how, professional and consultation fees
- Interest and dividend
- Other income, indicating the nature thereof.
- The notes to the Profit and Loss Account should also contain break-up of the expenditure incurred on employees who
- If employed throughout the financial year were in receipt of remuneration for that year which in the aggregate was not less than Rs. 3,00,000 or
- if employed for part of the financial year were in receipt of remuneration for any part of that year at a rate which in the aggregate was not less than Rs. 25,000 per month.
This note should also indicate the number of employees falling in
each of the above two categories. Usually the remuneration paid is broken up into:
- Salaries, perquisite, etc. and
- Contribution to provident fund and other funds.
9.4 PROFIT AND LOSS APPROPRIATION ACCOUNT
Sometimes companies divide their income statement into three parts:
- Trading Account
- Profit and Loss Account
- Profit and Loss Appropriation Account
The account showing the disposal of profits is known as Profit and Loss Appropriation Account. The balance on Profit and Loss Account is transferred to this Profit and Loss Appropriation Account. Profits available for dividend to shareholders are known as divisible profits. The Directors may decide to retain a certain amount to strengthen the companies finances. The amount retained may take the form of transfer to various reserves and funds. It is a wise policy to keep aside certain portion of divisible profit in the form of reserves and funds before distributing entire divisible profits among the shareholders as dividend. Therefore, the account which shows how the divisible profits of the company have been dealt with is known as Profit and Loss Appropriation Account, as appropriation means to keep aside.
The amount brought forward from the previous year is put on the
credit side together with current year’s profit. On the debit side of this account, the following items are usually found : i) Transfer to General Reserve.
- Transfer to Dividend Equalisation Fund (Dividend Equalisation Fund means a fund created out of profits available for dividend for the purpose of stable dividend policy i.e. making the rate of dividend uniform from year to year).
- Transfer to Sinking Fund for Redemption of Debentures.
- Dividend (Interim/Final, paid or proposed).
- Balance if any, carried to Balance Sheet. Therefore, this Account, generally appears as under :
Profit and Loss Appropriation Account
|To Bal. b/d (Dr. bal. from||By Balance b/d from last year|
|last year if any, as per||(As per Trial Balance)|
|Trial Balance)||By Savings in the provision|
|To Net Loss during the year,||for Taxation|
|if any||By Net Profit during the|
|To General Reserve||year (as per P&L A/c)|
|(transfer)||By Transfer from Reserves,|
|To Dividend Equalisation||if any|
To Sinking Fund for Redemption of Debentures
To Transfer to other Reserves & Funds
(Interim or Final,
To Balance c/d to
|By Bal. c/d to Balance Sheet|
9.5 FORM AND CONTENTS OF BALANCE SHEET
According to Section 210 of the Companies Act, a company is
required to prepare a Balance Sheet at the end of each trading period. Section 211 requires the Balance Sheet to be set up in the prescribed form. This provision is not applicable to banking, insurance, electricity and the other companies governed by special Acts. The Central Government has also the power to exempt any class of companies from compliance with the requirement of the prescribed form if it deems to be in public interest. The object of prescribing the form is to elicit proper information from the company so as to give a ‘true and fair’ view of the state of the company’s affairs. As a matter of fact both window dressing and creating secret reserves will be considered against the provisions of Section 211.
Schedule VI, Part I gives the prescribed form of a company’s Balance Sheet. Notes and instructions regarding various items have been given in brackets below each item. It may be noted that if information required to be given under any of the items or sub-items in the prescribed form cannot be conveniently given on account of lack of space, it may be given in a separate schedule or schedules. Such schedules will be annexed to and form part of the Balance Sheet.
Schedule VI, Part I permits presentation of Balance Sheet both in
horizontal as well as vertical forms. The forms with necessary notes, explanations, etc., are given below :
- Paise can also be given in addition to Rupees, if desired.
- Dividends declared by subsidiary companies after the date of the Balance Sheet should not be included unless they are in respect of a period which closed on or before the date of the Balance Sheet.
- Any reference to benefits expected from contracts to the extent not executed shall not be made in the Balance Sheet but shall be made in the Board’s report.
- Particulars of any redeemed debentures which the company has power to issue should be given.
- Where any of the company’s debentures are held by a nominee or a trustee for the company, the nominal amount of the debentures and the amount at which they are stated in the books of the company shall be stated.
- A statement of investments (whether shown under “Investments” or under “Current Assets” as Stock-in-Trade) separately classifying trade investments and other investments should be annexed to the Balance Sheet, showing the names of the bodies corporate (including separately the names of the bodies corporate under the same management) in whose shares or debentures, investments have been made (including all investments whether existing or not, made subsequent to the date as at which the previous Balance Sheet was made out) and the nature and extent of the investments so made in each such body corporate; provided that in the case of an investment company, that is to say, a company whose principal business is the acquisition of shares, stock, debentures or other securities, it shall be sufficient if the statement shows only the investments existing on the date as at which the Balance
Sheet has been made out. In regard to the investments in the capital of partnership firms, the names of the firms (with the names of all their partners, total capital and the shares of each partner) shall be given in the statement.
- If, in the opinion of the Board, any of the current assets, loans and advances have not a value on realisation in the ordinary course of business at least equal to the amount at which they are stated, the fact that the Board is of that opinion shall be stated.
- Except in the case of the first Balance Sheet laid before the company after the commencement of the Act, the corresponding amounts of the immediately preceding financial year for all items shown in the Balance Sheet shall be also given in the Balance Sheet. The requirements in this behalf shall in case of companies preparing quarterly or half-yearly accounts, etc., relate to the Balance Sheet for the corresponding date in the previous year.
- Current accounts with Directors and Manager, whether they are in credit or debit, shall be shown separately.
- The information required to be given under any of the items or sub-items in the Form, if it cannot be conveniently included in the Balance Sheet itself, shall be furnished in a separate Schedule or Schedules to the annexed to and form part of the Balance Sheet. This is recommended when items are numerous.
- Where the original cost of fixed assets and additions and deductions thereto, relate to any fixed asset which has been acquired from a country outside India, and in consequence of a change in the rate of exchange at any time after the acquisition of such assets, there has been an increase or reduction in the liability of the company, as expressed in India currency, for making payment towards the whole or a part of
the cost of the asset, or for repayment of the whole or a part of moneys borrowed by the company from any person, directly or indirectly, in any foreign currency specifically for the purpose of acquiring the asset (being in either case the liability existing immediately before the date on which the change in the rate of exchange takes effect), the amount by which the liability is so increased or reduced during the year, shall be added to, or as the case may be, deducted from the cost, and the amount arrived at after such addition or deduction shall be taken to be the cost of the fixed assets.
Explanation 1: This paragraph shall apply in relation to all Balance Sheets that may be made out as at the 6th day of June, 1966, or any day thereafter and where, at the date of issue of the notification of the Government of India, in the Ministry of Industrial Development and Company Affairs (Department of Company Affairs), G.S.R. No. 129, dated the 3rd day of January, 1968, any Balance Sheet in relation to which the paragraph applies, has already been made out and laid before the company in annual general meeting, the adjustment referred to in this paragraph may be made in the first Balance Sheet made out after the issue of the said notification.
Explanation 2 : In this paragraph, unless the context otherwise requires, the expressions “rate of exchange”, “foreign currency” shall have the meanings respectively assigned to them under sub-section (1) of section 43A of the Income Tax Act, 1961 (43 of 1961), and Explanation 2 and Explanation 3 of the said sub-section shall, as far as may be, apply in relation to the said paragraph as they apply to the said sub-section (1).
- VERTICAL FORM
Name of the Company …………….
Balance Sheet as at …………………
|Schedule||Figures as at the||Figures as at the|
|No.||end of current||end of previous|
|financial year||financial year|
|1. Sources of Funds (1) Shareholders funds :
(b) Reserves and surplus
(2) Loans funds :
(a) Secured loans
(b) Unsecured loans
II Application of Funds
(1) Fixed assets :
(a) Gross block
(b) Less : depreciation
(c) Net block
(d) Capital work-in-progress
(3) Current assets, loans and advances:
(b) Sundry debtors
(c) Cash and bank balances
(d) Other current assets
(e) Loans and advances
Less : Current Liabilities & provisions
Net current assets
(4) (a) Miscellaneous Expenditure to the
extent not written off or adjusted
(b) Profit and Loss Account Total
- Details under each of the items in Vertical Balance Sheet shall be given in separate Schedules. The Schedules shall incorporate all the information required to be given under A-Horizontal Form read with notes containing general instructions of preparation of Balance Sheet.
- The Schedules referred to above, accounting policies and explanatory notes that may be attached shall form an integral part of the Balance Sheet.
- The figures in the Balance Sheet may be rounded off to the nearest ‘000 or ’00 as may be convenient or may be expressed in terms of decimals of thousands.
- A footnote to the Balance Sheet may he added to show separately contingent liabilities.
In India, a joint stock company can prepare its Balance Sheet either in
horizontal or vertical form. Of the two forms of the Balance Sheet, vertical form is a better form because it speaks out the correlation of every item with the other items and coveys more meaning to the layman.
Abridged Balance Sheet
As an economy device, the Companies (Amendment) Act, 1988 introduced the concept of Abridged Balance Sheet vide Section 219(1) (b) (iv). As per this provisions, the companies need not send the detailed Balance Sheet together with many schedules and reports to shareholders and may send only the abridged Balance Sheet, Profit and Loss Account, Directors’s Report and Auditors’ Report as annual report. Numerous schedules to the Balance Sheet and detailed statements need not be a part of the annual report. However, SEBI has prescribed that a detailed Balance Sheet has to be furnished in the case of listed companies.
9.6 ACCOUNTING TREATMENT OF SPECIAL ITEMS
In addition to the provisions and general principles prescribed for the
preparation of financial statements of a company, there are some items which require specific accounting treatment.
- Interest on Debentures
Debentures interest is a business expenses and therefore, it is a charge
against profit and as such Profit and Loss Account is debited with the total amount of interest payable during the accounting year whether the company has earned the profit or not.
- Discount on the Issue of Debentures
Discount or costs, e.g. commission, brokerage, etc. incurred on the issue
of debentures should normally be written off as early as possible but in no case later than the date of redemption. The unwritten balance will be shown in the Balance Sheet under Miscellaneous expenditure on the asset side.
- Preliminary Expenses
Such expenses include the costs of formation of a company and since
their amount is usually large, it is not desirable to write off them in one year. Instated preliminary expenses are spread over a number of years and Profit and Loss Account is debited with certain fraction every year. The unwritten amount is shown under Miscellaneous Expenditures on the asset side of the Balance Sheet.
This item represents the amount not paid by the shareholders on the calls
made on them by the company. If this item is given in the trial balance, it is shown in the Balance Sheet on the liabilities side as a deduction from the called up amount under the main head of share capital. But if this item is given outside the trial balance as an adjustment, it would mean that the trial balance shows only the paid up capital and not called up capital. The amount of call-in-arrears is then added to the paid up capital to make the later as called up capital and then deducted again.
- Calls-in Advance
It is a debt on the company until the calls are made and the amount
received in advance is adjusted. A company may also pay interest on calls-in-advance and the rate of interest is usually stated in the articles. It should be treated as a current liability and shown under the heading current liabilities and provisions.
- Auditors Payments
Payments made to auditors for auditing the accounts and for doing any
other work for the company should be mentioned separately.
- Managerial Remuneration
The remuneration paid to managerial personal (e.g. directors, managing
directors or manager) of a company in any form or made is 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.
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 per cent of the net profits of the company in that year.
Dividends may be defined as the share of profits that is payable to each
shareholder of the company. The Companies Act lays down that dividends can be paid out of profits only and prohibits the payment of any dividend out of capital. Also, dividends shall be paid in cash only. A company may pay dividends from any or all of the three following sources :
- profits of the current year
- undisturbed profits of previous years
- moneys provided by the Central or any State Government for the payment of dividends in pursuance of a guarantee given by the Government concerned.
A dividend once declared, becomes a debt. Dividend is paid out of profits
on paid-up capital of the company. Calls-in-Advance cannot be treated as part of paid up capital for declaration of dividends.
- Proposed Dividend : The dividend recommended by the directors is termed as “Proposed Dividend”. Unless otherwise stated, the dividend at given rate is calculated on paid-up capital and it is (amount of proposed dividend) is debited to Profit and Loss Appropriation Account and shown on the liability side of the Balance Sheet under the heading “Provisions”.
- Interim Dividend : An Interim Dividend is a dividend paid by the directors at any time between two annual general meetings. It is always debited to Profit and Loss Appropriation Account. The interim dividend is usually paid for a period of six months.
Its calculation depends upon the language of the rate of dividend.
The directors may recommend another dividend when the final figures
of profits are available. Such dividend is known as final dividend. When final dividend is declared, interim dividend is not adjusted unless the resolution specifies otherwise.
- Unclaimed Dividend : Dividend declared but not claimed by some shareholders for some reason, such amount of dividend (not claimed) is known as “Unclaimed Dividend”. It is always shown on the liability side of the Balance Sheet under the heading “Current Liabilities”.
Since mid-seventies, there has been an incredible change in the way people
work and do business. One of the most significant contributors to this change is the large scale acceptance of computers. Computers have also made place in the area of accounting. Nowadays, there are financial accounting softwares that are used to store and maintain daily business transactions like purchase, sales, receipts, payments, purchase returns, sales returns, deposits and withdrawals etc.
Tally is the number one financial accounting package in India and is also
used abroad. With Tally you could be the owner, the financial controller, accountant, manager, auditor or anyone connected with accounts. Tally is a popular software because:
- It is user friendly and can be used even by everyone giving you full control over every aspect of your business accounting.
- No more wait for day-ends to have a quick look of the financial status of your Business/Firms. Tally provide instant results.
- Do more memorisation of codes for accounts, Debtors and Creditors.
- It is flexible and can be customised to suit your daily work schedules and needs like Customising Vouchers, Balance Sheets etc.
- Highly secured against data tempering. Different labels of security designed with different privileges to access and use the data.
- Help features to bail you out from any confusion.
Ex is a financial accounting software and is a product of Tata Consultancy
Services. There are two products under Ex
- Ex Personal Accountant
- Ex Next Generation
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- Ready templates for individuals, traders and manufacturers.
- Fully support multi-company accounting.
- Stock management – allows the user to generate Stock Statements and Stock Valuation Reports.
- Generic document facility yet flexible enough to match various invoicing needs.
- Do exhaustive reports designed in consultation with chartered accountants to meet statutory and business requirements.
- Quick information retrieval of any customers/supplies.
- Smart Finder – An easy to use tool for adhoc queries.
- Data Export – Supports export of selected reports to MS Word and MS Excelallows you to create your own report formats.
- Full support for dot matrix printing apart from support for laserjet/deskjet through windows.
- b) Ex Next Generation : Ex Next Generation is comprehensive business accounting software with document designer and extensive reporting capabilities perfect for medium sized businesses. For larger corporations with higher volume requirements, the robust, reliable and extendable accounting solution is – the Ex Next Generation 1.5 Multi User on SQL Server 7.0 TM.
- Easy to use Graphical User Interface
- Security at the individual activity level – Different passwords can be set for various activities.
- Layout designing of various documents
- Code-Less Accounting
- Multi-Company Accounting
- Smart Finder facility for Ledgers and other documents
- Monitoring of receivables and payables
- Stock valuation
– Two methods are used i.e.Weighted Average method and Moving Weighted Average Method
- Company accounts Consolidation Facility
- OLE Automation Support
- 32 bit Open Database Connectivity (ODBC)
Final accounts, as we know, are prepared to show business profit over a period
of time and to reveal the business position (financial) at a point of time. A company, like any other forms of business organisation, has also to prepare its final accounts every year. Preparation of final accounts is compulsory for a company. The Companies Act has made it obligatory for every limited company to prepare, present and publish its final accounts every year, in order to protect and safeguard the interest of the Owners. Section 209 and Section 210 deal with the provisions of preparation of final accounts for a company. Section 209 makes it compulsory for a company to keep certain books of account and Section 210 governs the preparation of the final accounts.
Revenue: Revenue is the monetary expression of the aggregate of products or services transferred by an enterprise to its customers during a period of time.
Profit and loss appropriation account: The account showing the disposal of profits is known as profit and loss appropriation account.
Dividend: Dividends may be defined as the share of profits that is payable to each shareholder of the company.
Deferred revenue expenditure: When a huge amount is spent on the expense and its effect is to last for a long time, it is called a deferred revenue expenditures.
- SELF ASSESSMENT QUESTIONS
- “Every Balance Sheet of Company shall give a true and fair view of the state of affairs of the company as at the end of the financial year and shall subject to the provision of Section 211 of the Companies Act, be in the form set out in Part I of Schedule VI…….”
Amplify and give the form of Balance Sheet.
- What are the various heads under which profits are usually appropriated by companies and for what reason?