Archive | Final Accounts

General Instructions for Preparation of Balance Sheet

In this article we will discuss about the General Instructions for Preparation of Balance Sheet. A. Current Assets: 1. An asset shall be classified as current when it satisfies any of the following criteria; (a) It is expected to be realized in, or is intended for sale or consumption in, the company’s normal operating cycle; […]

Directors‘ Report and Auditors’ Report

Directors’ Report: Previously, it was the practice with most Indian companies to send to the shareholders a copy of the balance sheet and the profit and loss account accompanied by only the briefest possible report from the directors. Apart from matters dealing with the disposal of profits, i.e., recommendations regarding transfer to reserves and dividends, […]

Divisible Profits: Meaning, Entries and Illustrations

The below mentioned article provides an overview on Divisible Profits:- 1. Meaning of Divisible Profits 2. Transfer to Reserve 3. Declaration of Dividend out of Reserve 4. Depreciation 5. Payment of Dividend 6. Profit from Subsidiary Companies 7. Dividends 8. Appropriation of Profits 9. Separate Bank Account for Dividends 10. Interest out of Capital 11. […]

Contingencies and Balance Sheet Date | Final Accounts

In this article we will discuss about the Contingencies and Events Occurring after the Balance Sheet Date. Contingencies: The term “contingencies” used in this Statement is restricted to conditions or situations at the balance sheet date, the financial effect of which is to be determined by future events which may or may not occur Estimates […]

Notes on Net Profit

In this article we will discuss about the Net Profit in Accounting Policies:- 1. Objective of Net Profit 2. Scope of Net Profit 3. Definitions 4. Period 5. Extra Ordinary Items 6. Ordinary Activities 7. Prior Period Items 8. Changes in Accounting Estimates 9. Changes in Accounting Policies 10. Contingencies and Events Occurring after the […]

Profits Prior to Incorporation in Final Accounts

It may happen in case of new companies that a running business is taken over from a certain date, whereas the company may be incorporated at a later date. The company would be entitled to all profits earned after the date of purchase of business unless the agreement with the vendors provides otherwise. But profits […]

Calculation of Commission in Final Accounts (With Illustrations)

The law permits payment of commission to managerial personnel on net profit calculated before taking into account the commission. If the profits are, for example Rs 7,20,00,000, a managing director (if there is only one) can receive up to 5% of Rs 7,20,00,000 or Rs 36,00,000 as his remuneration (the exact amount depends upon the […]

Final Accounts of General Insurance Business

In this article we will discuss about the Final Accounts of General Insurance Business along with solved illustrations. Insurance other than life insurance is called general insurance. Fire insurance against loss of property due to fire and marine insurance against loss of cargo, freight and ship are examples of general insurance Reserve for Unexpired Risks: […]

Final Accounts of Life Insurance Business

The insurance companies are required to prepare their financial statements i. e. Revenue Account, Profit and Loss Account and Balance Sheet according to the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors’ Report of Insurance Companies) Regulations, 2002. Insurers carrying on Life Insurance Business should comply with the requirements of Schedule A […]

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