Financial Statements and Analysis Test - 18

As per section 210(4) a financial year may be less or more than a calendar year, but it shall not exceed fifteen months. The financial year may extend to eighteen months, where special permission has been granted in this connection by the concerned Registrar of Companies [Proviso to section 210(4)]. Thus, annual accounts may be prepared for a period up to eighteen months with the special permission of the Registrar on the application submitted in the Form 61.

In the Old Act, Section 209 dealt with Books of account to be maintained, Section 209A dealt with inspection of books of account, Section 210 stipulated that every company has to lay annual accounts before its shareholders within 6 months from the end of the year. Section 211 provided for the manner of preparation of balance sheet and profit and loss account, Section 212 and 214 mandate that balance sheet of holding company should include certain particulars of subsidiary company and exemptions.  Section 215 indicates the manner of authentication of balance sheet and P& L a/c and approval of accounts before submitting the same to auditors. Section 216 and 218 and require attachment of auditors report and certain documents to annual accounts. Section 217 dealt with preparation of Board’s report.

If investment in immovable property  is made for long term,  it will be shown under the head non current assets and under the sub head non current investment. 

Claim against the company not acknowledged as debt is shown as contingent liability after preparing the balance sheet. It is shown as a footnote to the balance sheet.Contingent liabilities are those which may or may not arise as they are dependent on happening in future.

Bills of  exchange  is a liability.It wont be shown under reserves and surplus.

IAS 38 Intangible Assets outlines the accounting requirements for intangible assets, which are non-monetary assets which are without physical substance and identifiable (either being separable or arising from contractual or other legal rights). Intangible assets meeting the relevant recognition criteria are initially measured at cost, subsequently measured at cost or using the revaluation model, and amortised on a systematic basis over their useful lives (unless the asset has an indefinite useful life, in which case it is not amortised).IAS 38 Intangible Assets outlines the accounting requirements for intangible assets, which are non-monetary assets which are without physical substance and identifiable (either being separable or arising from contractual or other legal rights). Intangible assets meeting the relevant recognition criteria are initially measured at cost, subsequently measured at cost or using the revaluation model, and amortised on a systematic basis over their useful lives (unless the asset has an indefinite useful life, in which case it is not amortised).

Loose tools are spare parts of machines, etc.  They are shown under the head inventories along with stock of raw materials,  work in progress and finished goods.

Computer software is an intangible asset because it is an identifiable non-monetary asset without physical substance.

Advance payment towards a certain expense is shown under other current assets.

Work in progress is semi finished stock of goods held for purpose of trade in mormal course of business.So they are shown under inventories under current assets.