PROJECT REPORT

ON
FINAL ACCOUNTS OF LIMITED COMPANIES
IN PARTIAL FULFILLMENT FOR THE
REQUIREMENTS OF THE
COURSE B.COM LL.B. (Hons.) IN THE SUBJECT OF
CORPORATE ACCOUNTING

UNIVERSITY INSTITUTE OF LEGAL

STUDIES
Submitted To: Submitted By:
Ms. Kajal Ma’am Hitakshi gupta
Assistant Professor Section- E
University Institute of Legal Studies Roll No.242/20
ACKNOWLEDGEMENT
The success and final outcome of this project required a lot of guidance and
assistant from many people and I’m extremely fortunate to have got this all
along the competition of my project report. Whatever I’ve done is only done due
to such guidance and I would never forget to thank them. I take this opportunity
to record deep sense of gratitude to my teacher Ms. Kajal Popli, University
Institute of Legal Studies Chandigarh for his incontestably perfect
unmatched guidance, encouragements and efforts made during the preparation
of this project and during his lectures which enabled me to complete this project
successfully on topic :
FINAL ACCOUNTS OF LIMITED COMPANIES
I owe my regards to entire faculty of University Institute of Legal Studies, from
where. I’ve learnt basics of laws and whose informal discussions helped me in
entire duration of work.
Hitakshi Gupta
Sem- 2, Sec- E
Contents
• INTRODUCTION TO LIMITED COMPANIES…….…………1
• FINANCIAL STATEMENTS…………………………………………2
• CHARACTERISTICS, NATURE AND OBJECTIVES ………..3
• PROVISIONS RELATED……………………………………………..4
• GENERAL INSTRUCTIONS………………………………………..7
• FEATURES OF BALANCE SHEET………………………………..9
• BALANCE SHEET……………………………………………….…….10
• STATEMENT OF PROFIT & LOSS ACCOUNT………...……12
• CONCLUSION………………………………………………………….14
• BIBLIOGRAPHY……………………………………………...……….15
 1

Introduction
A limited company (LC) is a general form of incorporation that limits the
amount of liability undertaken by the company’s shareholders. It refers to a
legal structure that ensures that the liability of company members or
subscribers is limited to their stake in the company by way of investments or
commitments. In a legal sense, a limited company is a person.
The naming convention for this type of corporate structure is commonly
used in India, where a firm’s name is followed by the abbreviated “Ltd.” In
India, there are three types of limited company: a public limited company, a
private limited company, and a one-person company. A company’s liability
may be limited by shares, in which case the liability of the company’s
members is limited to the amount of the shares held by them, or it may be
limited by guarantee, in which case the liability is limited to a predetermined
amount the company’s members have agreed to contribute if the company
is dissolved with outstanding liabilities.
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Financial Statements
The statements which are prepared to ascertain the profit earned or loss suffered and
position of assets and liabilities at a particular date are known as financial statements.
These are the final product of accounting process. A set of financial statements as
per Section 2(40) of the Companies Act, 2013 include:
(i) Balance sheet i.e. position statement
(ii) Statement of profit and loss i.e. income statement
(iii) Notes to accounts
(iv) Cash flow statement
Section 129 of the Companies Act, 2013 requires the company to prepare its financial
statements every year in prescribed form i.e. Schedule III of the Companies Act, 2013.
Uses and Importance of Financial Statements
(I) Report on stewardship function
(ii) Basis for fiscal policies
(iii) Basis of granting of credit
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Characteristics of Financial Statements
(i) Financial statements are historical documents as they relate to past period.
(ii) Financial statements are prepared in monetary terms.
(iii) Balance sheet reveals the financial position and statement of profit and loss
shows the profitability of the business organisation.
Nature of Financial Statements
(i) Recorded facts
(ii) Accounting conventions
(iii) Postulates
Objectives of Financial Statements
(i) Financial statements provide the information about the earning capacity of the
business.
(ii) Financial statements provide the information about the economic resources and
obligation of an enterprise.
(iii) Financial statements also provide the information about the cash flows.
 4
A private limited company is a limited company incorporated under the
Companies Act 2013 (or one of its predecessor acts), with a minimum paid-up
share capital (if any) of ₹1 lakh , with an article that restricts the transfer of its
shares; it may have between two and two hundred members, and its name ends
with “Private Limited” (abbreviated Pvt Ltd). A public limited company must have a
paid-up share capital of at least ₹5 lakh, and at least seven members; its name
ends “Limited” (abbreviated Ltd). A one-person company (OPC) is a private
company; this type of company may have only one director and member. The
preparation of Company Final Accounts include the preparation of a set accounts
at the end of accounting year/period. The Company Final Accounts consists of:
1. Profit & Loss A/C
2. Balance Sheet
(In accordance with the Companies Act, 2013)
Provisions relating to financial statements under the New Companies Act
2013
1. Section 129 of companies act 2013, provides for preparation of financial
statements.
2. 2(40) to include balance sheet, profit and loss account/income and expenditure
 5
3. New section 129 corresponds to existing section 210. It provides that the financial
statements shall give a true and fair view of the state of affairs of the company and
shall comply with the accounting standards notified under new section 133.
4. It is also provided that the financial statements shall be prepared in the form
provided in new schedule III of Companies Act, 2013.
5. It may be noted that in the new schedule III the provisions for preparation of
balance sheet and statement of profit and loss have been given which are on the
same lines as in the existing schedule VI.
6. Further, in the new Schedule III detailed instructions have been given for
preparation of consolidated financial statements as consolidation of accounts of
subsidiary companies is now made mandatory in section 129.
7. It may be noted that for the first time a provision has been made in the new section
129(3)that if a company has one or more subsidiaries it will have to prepare a
consolidated financial statement of the company and of all the subsidiaries in the form
provided in the new schedule III of Companies Act, 2013.
8. The company has also to attack along with its financial statement, a separate
statement containing the salient features of the financials of the subsidiary companies
in such form as may prescribed by the rules.
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9. It is also provided that if the company has interest in any associate company or a
joint venture the accounts of that company as well as joint venture shall be
consolidated.
10. For this purpose associate company has been definedinnewsection2(6) company
has significant influence i.e. it has. 20% of the total share capital of the company or
has control on the business decision under an agreement.
11 .The Central Government has power to exempt any companies from complying
with any of the requirements made under the section.

GENERAL INSTRUCTIONS FOR PREPARATION OF BALANCE SHEET AND

STATEMENT OF PROFIT AND LOSS OF A COMPANY
Where compliance with the requirements of the Act including Accounting Standards
as applicable to the companies require any change in treatment or disclosure
including
addition, amendment, substitution or deletion in the head or sub-head or any changes,
inter se, in the financial statements or statements forming part thereof, the same shall
be
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FEATURES OF BALANCE SHEET AS

PER REVISED SCHEDULE III
• The Revised schedule as eliminated the concept of ‘Schedule’ and such
information is now to be furnished in the notes to accounts.
The revised schedule follows Accounting Standards in case there is any conflict
prevails.
The revised schedule prescribes the vertical format for presentation of balance
sheet.
All assets and liabilities classified into current and non-current and presented
separately in the balance sheet.
The shareholder holding more than 5% shares must be disclosed in the notes to
accounts.
Any Debit balance in the statement of Profit and Loss will be disclosed under the
head “Reserve and Surplus”
The term ‘Sundry Debtors’ has been replaced with the term ‘Trade Receivables’.
‘Capital Advances’ are specifically required to be presented separately under the
head ‘Loans and Advances.
Balance Sheet
10

It may be defined as a
statement of assets and
liabilities of the company, at a
particular date. It must exhibit a
true and fair view of the financial
position at the close of the year.
It is prepared and presented in
the form prescribed in Schedule
III Part I of the Companies Act,
2013, and is broadly divided into
two parts, (i) Equity and
liabilities (ii) Assets.
Proforma of Balance Sheet (As
per Revised Schedule VI)
11
Profit & Loss Statement
12

The title of ‘profit and loss

account’ is charged to
statement of profit and
loss. If shows the net
result of business
operations. Its form is
prescribed in Schedule III,
Part II of the Companies
Act, 2013.
13
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Conclusion
Final accounts give an idea about the profit accountability and
financial position of a business to its management, owners, and other
interested parties. Section 129(1) of the companies act, 2013
provides that the financial statements shall give a true and fair view of
the state of affairs of the company or companies and comply with the
accounting standards.The financial statements generally include two
statements: balance sheet and statement of profit and loss which are
required for external reporting and also for internal needs of the
management like planning, decision-making and control. Every
company registered under the Act shall prepare its balance sheet,
statement of profit and loss and notes to accounts.
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Bibliography
Textbooks:
• Grewal T.S. & Gupta , S.C. Corporate Accounting ,S.Chand and
Co.
New Delhi
• Jain S.P. Narang, Corporate Accounting ,Kalyani Publishers
Websites:
http://ebook.mca.gov.in/Actpagedisplay.aspx?PAGENAME=1751
2
https://www.google.com/amp/s/taxguru.in/company-law/financial-
statementsscheduleiii-companies-act-2013.html%3famp
https://commerceatease.com/balance-sheet-as-per-revised-
schedule/