PROFIT & LOSS ACCOUNT
DISCLOSURE REQUIREMENTS AS PER SCHEDULE VI (PART II) OF THE COMPANIES ACT, 1956
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Sr. No.
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Sr. No.
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Particulars
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1.
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General
The profit and loss account should disclose:
(a) the result of the working of the company during the period covered by the account; and
(b) every material feature, including credits or receipts and debits or expenses in respect of non-recurring transactions or transactions of exceptional nature.
The profit & loss account sets out the various items relating to the Income & Expenditure of the Company arranged under the most convenient heads and should disclose the following information in respect of the period covered under audit:
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1.1
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Ensure the disclosure of the name of the Company and the period for which it has been made stated.
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1.2
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Except in the case of the profit and loss account laid before the company after the commencement of the Act, the corresponding amounts for the immediately preceding financial year for all items shown in the Profit & Loss account shall be given in the profit and loss account.
In case of companies preparing quarterly or half-yearly accounts, the above requirement relate to the profit and loss account for the period, which entered on the corresponding date of the previous year.
Note:
· Where the period covered by the previous accounts does not comprise the same period as covered by current period a note thereof should be given.
· In case of first accounts, a note thereof should be given.
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1.3
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Figures in the Profit & Loss account should be uniformly stated in Rupees giving Paise also or rounded off to the nearest Rupee if in horizontal form or in the case of vertical form, figures stated to be rounded off to the nearest ‘ 000 or ‘ 00 or in decimals of thousands as prescribed by the Institute.
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1.4
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The Central Government may direct that a company shall not be obliged to show the amount set aside to provisions other than those relating to depreciation, renewal or diminution in value of assets, if the Central Government is satisfied that the information should not be disclosed in the public interest and would prejudice the company, but subject to the condition that in any heading stating an amount arrived at after taking into account the amount set aside as such, the provision shall be so framed or marked as to indicate that fact.
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Additional Information
While completing the following steps reference must be made to the “Statement on the Amendments to Schedule VI to the Companies Act, 1956” issued by the Institute of Chartered Accountants of India.
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2.
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Expenditure :
The expenditure incurred on each of the following items should be disclosed separately for each item :-
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2.1
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Consumption of stores and spare parts.
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2.2
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Power and Fuel
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2.3
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Rent
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2.4
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Repairs to Buildings
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2.5
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Repairs to Machinery
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2.6
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Salaries, Wages and Bonus
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2.7
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Contribution to Provident and other Funds
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2.8
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Workmen and Staff Welfare Expenses ( to the extent not adjusted from any previous provision or reserve )
Note : Information in respect of this item should also be given in the balance sheet under the relevant provision or reserve account.)
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2.9
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Insurance
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2.10
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Rates and Taxes, excluding taxes on income
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2.11
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Miscellaneous expenses
Note:
· Any item under which the expenses are exceeding 1% of the total revenue of the company or Rs. 5,000, which ever is higher, should be shown as a separate and distinct item against an appropriate account head in the profit and loss account and should not be combined with any other item to be shown under “Miscellaneous expenses”
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2.12
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Amounts provided for depreciation, renewals or diminution in the value of fixed assets.
Note:
· If such provision is not made by way of a depreciation charge, the method adopted for making such provision should be stated.
· If no provision is made for depreciation, the fact that no provision has been made should be stated (and the quantum of arrears of depreciation computed in accordance with section 205 (2) of the Act shall be disclosed by way of a note)
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2.13
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Interest on company’s debentures or other fixed loans i.e. loans for fixed periods stating separately the amount of interest, if any (paid or payable) to the Managing Director and the Manager, if any.
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2.14
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Commission paid to Sole Selling Agents within the meaning of Section 294 of the Act and other Selling Agents.
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2.15
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Brokerage and discount on sales, other than usual trade discounts.
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2.16
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Amounts reserved for-
a) Repayment of share capital
b) Repayment of loans
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2.17
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a) The aggregate, if material, of the amount set aside, or proposed to be set aside, to reserves, but not including provisions made to meet any specific liability, contingency or commitment known to exist at the date as at which the Balance Sheet is made up.
b) The aggregate, if material, of any amounts withdrawn for such reserves
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2.18
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a) The aggregate, if material, of any amount set aside to provisions made for meeting specific liability, contingencies or commitments.
b) The aggregate, if material, of the amounts withdrawn from such provisions, as no longer required.
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2.19
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The amount of charge for Indian Income Tax and other Indian Taxation on profits including, where practicable, with Indian income-tax any taxation imposed elsewhere to the extent of the relief, if any, from Indian income-tax and distinguishing, where practicable, between income-tax and other taxation.
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2.20
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The aggregate amount of the dividends paid and proposed stating whether such amounts are subject to Deduction of Income Tax or not.
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2.21
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Amount, if material, by which any items shown in the profit and loss account are affected by any change in the basis of accounting.
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2.22
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Prior period and extraordinary items.
Note:
Refer to Accounting Standard - 5 on “Profit / Loss for the period, Prior Period and Change in Accounting Policies” for appropriate disclosures.(Refer separate checklist on AS 5
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3.
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Income :
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3.1
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Aggregate amount of sales (turnover)
Note:
· Breakup to be given in respect of each class of goods dealt with by the company indicating amount of sales and quantities of such sales for each class seperately.
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3.2
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Amount of income from investments, distinguishing between trade and other investments.
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3.3
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Other Income by way of interest, specifying the nature of the income.
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3.4
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The amount of Income Tax Deducted if the gross income is stated under 3.2 and 3.3
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3.5
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a) Dividends from subsidiary companies.
b) Provisions for loss of subsidiary companies.
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3.6
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Profits or Losses on investment (showing separately the extent of profits or losses earned or incurred on account of membership of a partnership firm)( to the extent not adjusted from any previous reserve or provision)
Note : Information in respect of this item should also be given in the balance sheet under the relevant provision or reserve account.)
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3.7
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Profits or losses in respect of transactions of a kind, not usually undertaken by the company or undertaken in circumstances of an exceptional or non-recurring nature, if material in amount.
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3.8
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Miscellaneous Income.
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4
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4.1
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In the case of Manufacturing Companies
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4.1.1
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Value of raw materials consumed giving item wise breakup and indicating quantities thereof. All-important basic raw materials to be shown as separate items.
Note:
· All items, which in value account for 10% or more of the total value of raw materials consumed to be shown as separate items.
· The intermediates or components procured from other manufacturers may, if their list is too large to be included in the breakup, be grouped under suitable headings without mentioning the quantities, provided no one item in value individually exceeds 10% or more of the total value of the raw material consumed.
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4.1.2
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Opening and closing stock of goods produced, giving breakup in respect of each class of goods and indicating the quantities thereof.
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4.2
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In case of trading companies,
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4.2.1
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Purchases made and the opening and closing stocks, giving break-up in respect of each class of goods traded in by the company and indicating the quantities thereof.
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4.3
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In the case of a company rendering or supplying services :
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4.3.1
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The gross income derived from such activities.
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4.4
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In case of a company which falls under more than one category stated in 4.1, 4.2 and 4.3 above:
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4.4.1
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The total amounts shown in respect of opening and closing stocks, purchases, sales and consumption of raw-materials with value and quantitative break up and the gross income from services rendered.
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4.5
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In the case of other companies, :
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4.5.1
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The gross income derived under different heads
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Note:
· The quantities of raw materials, purchases, stock and the turnover, shall be expressed in quantitative denominations in which these are normally purchased or sold in the market.
· For the purpose of the items 4.1, 4.2 & 4.4 the items for which the company is holding separate industrial licenses, shall be treated as separate classes of goods, but where a company has more than one industrial license for production of the same item at different places or for expansion of the licensed capacity, the item covered by all such licenses shall be treated as one class.
· In the case of trading companies, the imported items shall be classified in accordance with the classification adopted by the Chief Controller of Imports and Exports in granting the import licenses.
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· In giving the breakup of purchases, stocks and turnover, items like spare parts and accessories, the list of which is too large to be included in the breakup, may be grouped under suitable headings without quantities, provided all those items, which in value individually account for 10% or more of the total value of purchases, stocks, or turnover, as the case may be, are shown as separate and distinct items with quantities thereof in the breakup.
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4.6
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In case of all concerns having works-in-progress :
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4.6.1
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The amounts for which (such works have been completed) at the commencement and at the end of the accounting period
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4.7
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(1) Managerial Remuneration
The profit and loss account should contain or give by way of a note detailed information showing separately the following payments made or provided by the company, subsidiaries of the company or any other person during the financial year to the directors (including Managing Director) or manager, if any,:-
a) Managerial remuneration under sec. 198 of the Act paid or payable during the financial year to the Directors (including managing directors)or Managers , if any,
b) Other allowances and commission including guarantee commission (details should be given)
c) Any other perquisites or benefits in cash or in kind (stating approximate money value where practicable)
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d) Pensions, etc.:
· Pensions,
· Gratuities,
· payments from provident fund, in excess of own subscriptions and interest thereon,
· Compensation for loss of office,
· Consideration in connection with retirement from office.
(2) Statement of net profit under section 349
The profit and loss account should contain or give by way of note a statement showing the computation of net profits in accordance with section 349 of the Act with relevant details of the calculation of the commissions payable by way of percentage of such profits to Directors (including Managing Directors) or Managers(if any)
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4.8
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The profit and loss account should contain or give by way of a note detailed information in regard to amounts paid to the auditors (whether as fees, expenses or otherwise for services rendered-)
a) As auditor
b) As advisor, or in any other capacity, in respect of –
Ø Taxation matters
Ø Company law matters
Ø Management services and
c) In any other manner
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4.9
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In case of manufacturing companies, the profit and loss account should contain,by way of note in respect of each class of goods manufactured, detailed quantitative information in regard to the following, namely:-
a) The licensed capacity (where the license is in force)
b) Installed capacity, and
c) Actual production
Note:
· The licensed capacity and installed capacity of the company as on the last date of the year to which profit and loss account relates, shall be mentioned against items (a) & (b) above respectively
· Against item (c), the actual production in respect of the finished products meant for sale shall be mentioned. In cases where the company sells semi processed products, separate details thereof shall be given.
· For the purposes of this paragraph, the items for which the company is holding separate industrial licenses shall be treated as separate class of goods but where a company has more than one industrial license for production of the same item at different places or for expansion of the license capacity, the item covered by all such licenses shall be treated as one class.
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4.10
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The profit and loss account should contain, by way of note the following information, namely :-
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(a) the value of imports calculated on C.I.F basis by the company during the financial year in respect of:-
(i) Raw Materials
(ii) Components and Spare parts
(iii) Capital goods
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(b) Expenditure in foreign currency during the financial year on account of royalty, know- how, professional, consultation fees, interest and other matters
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(c) Value of all imported Raw- Materials, spare parts and components consumed during the financial year and the value of all indigenous raw material, spare parts and components similarly consumed and the percentage of each to total consumption.
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(d) The amount remitted during the year in foreign currencies on account of dividends, with a specific mention of the number of non resident share holders, the number of shares held by them on which the dividends were due and the year to which the dividends related
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(e) Earnings in foreign exchange classified under the following heads namely:-
(i) Exports of goods calculated on FOB basis
(ii) Royalty, know-how, professional and consultation fees
(iii) Interest and dividend
(iv) Other income indicating the nature thereof.
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