Question

Financial statements are prepared following the consistent accounting concepts, principles, procedures and also the legal environment in which the business organisations operate. These statements are the source of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions.

From the above statement identify any two values that a company should observe while preparing its financial statements. Also, state under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013:  

(i) Calls-in-arrears
(ii) Calls-in-advance
(iii) Gain on reissue of forfeited equity shares
(iv) Trade payables to be settled beyond 12 months from the date of Balance Sheet

Answer 1

Values that a company must observe while preparing its financial statements.
(a) The financial statements must be drawn following the accounting concepts, principles, procedures
(b) The financial statements must be drawn following the ethical and legal framework 

Item	Major Head	Sub-Head
Calls-in-Arrears	Shareholders’ Funds	Subscribed Capital (by way of deduction)
Calls-in-Advance	Current Liabilities	Other Current Liabilities
Gain on Re-issue of Forfeited Shares	Shareholders’ Funds	Reserves & Surplus
Trade Payables to be settled beyond 12 months from the date of Balance Sheet	Non Current Liabilities	Other Long-term Liabilities (Trade Payables)