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Financial elements of a financial statement are broadly classified into five categories. These are grouped according to the monetary characteristics they possess.
As per Section 2 (40) of the companies Act 2013 states that the financial statement includes the below:
Financial statement of company shall be prepared in accordance with section 129 (Schedule III )of the Companies Act, 2013 and such FS laid before shareholders at the AGM of the company.
Let’s have a brief understanding of all five.
An asset is a resource (either tangible or intangible) which is in control of the enterprise to derive monetary benefits from the use of it. Some of the points to be remembered are:
Liability is defined as an obligation of an enterprise that arose as a result of past events. Some of the important points to be remembered in its context are:
Equity can be defined as the remaining interest of an enterprise over its assets after deduction of liabilities from it. In short, equity is the excess of aggregate assets over aggregate liabilities.
Income can be:
Income also includes revenues and gains. Revenue is an income that arises during the ordinary course of business whereas, a gain is an income that may or may not arise during the normal course of business.
Expense
The expense is an antonym of income. Following are considered as an expense:
The expense is defined as the charges incurred in the ordinary course of business like wages paid, rent paid etc., whereas losses may or may not incur in the ordinary course of business. For example loss on the sale of fixed assets. Expenses are shown on the debit side of profit and loss A/C.
The following individuals will sign the 2013 Financial Statement in accordance with Section 134 of the Companies Act:
Note: Irrespective of whether he chaired the meeting or not, the company’s chairperson can sign financial statements after being authorized by the Board of Directors.
When the auditor receives the signed financial statement, the auditor will prepare an auditor’s report, which will be appended to the financial statement.
The Directors, Chief Executive Officer/ Company Secretary/ Chief Financial Officer, and the Company’s Statutory Auditors can also sign the Financial Statements online with their Digital Signatures.
The date on which the Financial Statements, including the Balance Sheet, Profit, and Loss Statement, Cash Flow Statement, and other supporting documents, are signed can be either before or after the date on which the audit report is signed.
The financial statements of the company are sent to the Auditors for signature after they have been signed by the Directors. Auditors and directors can sign the financial statement from separate locations and on different dates, i.e. the date on which the auditors sign the financial statement may differ from the date on which the directors sign it.
When both the Directors and the Auditor sign the Financial Statement of the Company, it is approved by the shareholders at the Annual General Meeting of the Company.
According to Section 134(1), the Company’s financial statements must be approved by the board of directors in a meeting and signed on behalf of the board.
A financial Statement must be adopted by the firm at the Annual General Meeting. The company’s Annual General Meeting might be convened within six months of the financial year’s end, on September 30th.
The financial statement including any consolidated financial statements shall be circulated after signing, together with a copy of each of—
According to Section 134 of the Companies Act, the company’s 2013 financial statement must be signed in compliance with the Act’s laws and provisions.
Every company is required to comply with the Act’s provisions. If the company fails to comply with the Act’s provisions regarding the signing of financial statements, the company will be fined 3 lakhs Rupees, and each officer of the company who is in default will be fined 50,000/- Rupees, and all of the company’s directors and officers will be subject to fines, imprisonment, or both.
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