Preparation and Presentation of Final Accounts of Joint Stock Company

For preparing and presenting of final accounts of joint stock company, we have to follow amended provisions of Indian Company Law 1956. These provisions do not apply on insurance, electricity  and banking companies. These companies have to follow the provisions of their relating laws. Except these companies, we will explain all the provisions and rules for preparing and presenting of final accounts of join stock companies.



As per Company Law, A Joint Stock  Company has to prepare and to present following final accounts

1. Manufacturing Account  : This is the part of Final accounts of joint stock company which is in manufacturing or construction industry. This account is made for finding cost of production. Same cost of production is transferred to the Debit Side of Trading Account

2. Trading Account  : This Account is also part of the final accounts of joint stock company. With the help of this account, we find the gross profit which is transferred to Profit and Loss Account.

3.  Profit and Loss Account  : This Account is also part of final accounts of joint stock company. This account is made for finding the net profit after taxation. This net profit is transferred to Profit and Loss Appropriation Account.

4. Profit and Loss Appropriation Account  : This account is made for all nonoperational adjustments. In this account, we adjust the amount of general reserve and dividend. Balance of this account is surplus which is transferred to the liability side of balance sheet. This surplus is included in the surplus and reserve section under the liability side of balance sheet.

5. Balance Sheet  : Balance sheet of joint stock company shows the financial position. In this  sheet, we show all the assets and liabilities. This balance sheet provides lots of useful information to investors, Govt., employees and customers.

Now, we explain which section tell you what.

1. Section 210

Section 210 of Indian Company Act 1956, explain the provisions for preparing final accounts.

Schedule VI ( Part II)

a) Same provision applies for Income and expenditure account 

Like Trading and profit and loss account, A Not-for Profit Organisation will make income and expenditure account.

b) Result 

Profit and loss account should result of the business operation. We will debit all the operational expenses and we will credit all the operational incomes. Result will be in the form of profit or loss.

c) Clarity

Every data in profit and loss account should be shown in very clear way. For example, we take the sales. It is the part of income of company. Every item and every product categories sales should be included in the company sales. We also include the sales agents' sale in it.

d) Expenses paid or Accrues  and Provisions 

All the expenses whether these are paid or not should be included in the debit side of profit and loss account. We should also adjust different provisions in profit and loss account.

Main provisions are 

i) Provision for bad debts 

ii) Provision for depreciation 

iii) Provisions for Taxation 

e)  Divisible Profits 

Profit Available or dividend to shareholders are known as divisible profits. Proposed, interim  and declared dividend should be adjusted from profit and loss appropriation account.

2. Section 211

As per section 211, company's balance sheet should as per schedule VI part I. We have explained this concept with more detail at here.

Important for Students : {This written lecture is the part of CS Accounting Notes and Corporate Accounting}