Financial statements are nothing but a record of all economic activities, which shows where the business, person, or any other entity stands. It reports on the company’s assets, liabilities, and owner’s capital at any given point in time, and it contains Income Statement, Balance Sheet, Cash flow statement, and Retained Earnings. The financial statement shows the company’s profit loss in the Income statement. The statement of preserve earning is also known as equity, which shows the change in the preserve making between the initial and final time duration (a month or a year).
NECESSARY THINGS REQUIRED IN PREPARATION OF FINANCIAL STATEMENT
- The balance sheet
- The statement of cash flows
- Income statement
- Statement of Owners’ Equity
PREPARATION OF FINANCIAL STATEMENT
- Source of information: As to prepare something, a source is required. So to prepare a financial statement, a source of information is needed.
- Collection of Evidence: Bank accounts, management accounts, payrolls, bank statements, invoices, and receipts are examined and collected.
- Passing Journal Entries: The entries of the business transactions are further passed
- Ledger Posting of Journal Entries: Transferring of debit and credit items from journal entries into their separate accounts is done
- Preparing Trial Balance: From closing balances of the general ledger accounts, the trial balance is crafted.
- Give Effects of Adjustments: Then adjustments are made in Trail balance.
- Preparing Adjusted Trial Balance: After the adjustments are done in the trial balance. Adjusted Trial balance is crafted.
- Preparation of Final accounts,
- Trading Account / Revenue Account
- Profit & Loss Account / Income & Expenditure Account
- Balance Sheet / Statement of Affairs
- Notes to Accounts ( applicable only if it’s a company)
- Preparing Cash Flow Statement: From final accounts, the Cash Flow Statement is prepared. And this is how the Financial statement is ready.
ANNUAL ACCOUNT FOR THE FINANCIAL YEAR
Resolve the balance sheet of the company March 31,…………….
The gains & loss account of the company for annually as on the informed date and at that moment received, examined and approved and signed on behalf of the Board Of Directors by Mr. ………….., Director, Mrs.……….., Director and Mr./Mrs. …………., company secretary and be submitted to the Auditors of the company for their report.
Settled Further That
Reported the report for the end of the year March 31, ………… As-deposited before the meeting, properly initialed by the chairmen of the meeting for the motive of identification, and examined and approved by the Board and signed on behalf of Board Of Directors.
Mr. ………. Director Mrs. …………
Provisions stipulated under subsection 3 of section 179 of the companies ACT, 2013. read with companies (Meeting of Board and its Powers) Rules, 2014, all companies directors and individually permitted to file the resolution with the registrar of companies, ……………
Along with the requisite e-Form.
The company will have to pay the fine, which is not less than 5 Lakh. If the company fails to file the resolution under sub-section (1) or sub-section(2), the company must pay the penalty, which is mandatory. The fine will extend to 25 Lakh also, which is not suitable for companies.
The Board will accept the financial statement of Directors before it will sign on behalf of the Board by the company’s chairperson. There he is authorized by the Board or by two directors. Out of this one will be the managing director, the Chief Executive Officer, the Chief Financial Officer, and the company’s company secretary. They are appointed, or in the case of One Person Company, only by one director, for submission to the auditor for his report thereon.
M/s Dinesh J. Shah & Associates is a practising CA firm in field of Taxation, GST, Audit, Project Finance and Government Subsidy for more than 20 years, for any further clarification/query, kindly contact 9825373707 or mail at email@example.com or firstname.lastname@example.org.