Duration: 60

mins
Slides: 11

LMT SCHOOL OF MANAGEMENT, THAPAR

UNIVERSITY
Masters of Business Administration

Course: Financial Reporting and Analysis

Faculty: Dr. Sonia Garg (Email:
sonia.garg@thapar.edu)

Session 8: Process of Preparation of Financial

Statements for Corporate Entities (II)

Form of Financial Statements (Part I

of Schedule VI to the Companies Act)

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Process of Preparation of Financial

Statements for Corporate Entities

Some features of financial

statements

Previous years figures

Income Tax Expense in the P/L

Net Profit after providing for dividend goes to Reserves and Surplus;
Dividend exceeding 10% of paid-up capital can be declared only after
transferring a prescribed % to general reserve
Miscellaneous Expenditure on asset side is revenue expenses
capitalised to the extent not written of
Loss maybe on asset side to be written of or subtracted from reserve
and surplus
P/L Appropriation account gives the distribution of net profit
Shareholders funds = share capital + reserves and surplus
(miscellaneous expenditure not written of + loss)
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Process of Preparation of Financial

Statements for Corporate Entities

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Process of Preparation of Financial

Statements for Corporate Entities

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Process of Preparation of Financial

Statements for Corporate Entities

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Process of Preparation of Financial

Statements for Corporate Entities

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Process of Preparation of Financial

Statements for Corporate Entities

Issue of Shares at a
Premium

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Process of Preparation of Financial

Statements for Corporate Entities

Bonus Shares
When shares are issued to existing shareholders without
any consideration, it is accounted out of accumulated
profits and reserves.
For example in case of Mamta Fashions Pvt Ltd,
Accumulated reserves and P/L accounts are at Rs.
88,007; if the firm issues 6000 bonus shares for Rs. 10
each the following journal entries will be made

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Process of Preparation of Financial

Statements for Corporate Entities

10

Common Adjustments
Depreciation of fixed assets

Loss due to fire

Closing Inventory

Correction in classification of
capital expenditure as
revenue expenditure

Expenses due but not paid

Inter-transfer from trading

account

Prepaid Expenses

Deferment of revenue
expenditure

Bad Debts

Amortization of intangible
assets

Income accrued but not

received

Managerial Remuneration

Write of of preliminary
expenses

Provision for Income Tax

Provision of doubtful debts

Proposed Dividend

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Transfer to general reserve

Process of Preparation of Financial

Statements for Corporate Entities

Bills receivable dishonored

11