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Question
Financial statements are prepared following the consistent accounting concepts, principles, procedures and also the legal environment in which the business organizations operate. These statements are the sources 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 in a meaningful way.
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.
General Reserves, short term loans and advances, Capital work in progress and desgin.
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Solution
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 |
|
General Reserve |
Shareholders’ Funds |
Reserves & Surplus |
|
Short Term Loans and Advances |
Current Liabilities |
Short Term Borrowings |
|
Capital Work-in-progress |
Non Current Assets |
Fixed Assets |
|
Design |
Non Current Assets |
Fixed Assets (Intangible Assets) |
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| ______ | ______ |
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