Financial Statements As Per Companies Act 2013 (Section 129)

Financial Statements of Companies Act 2013

What are Financial Statements as per Company Law? –

"A financial statement as per Companies Act 2013 in relation to a company, according to S. 2(40), includes—

1. a balance sheet as of the end of the financial year;

2. a profit and loss account, or, in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;

3. any explanatory note appended to or forming part of, any document referred to in sub-clause I to sub-clause (ii)to sub-clause I (iv).

However, in the case of a one-person corporation or a tiny business, the financial statement is important. Cash flow statement may not be included in the case of an inactive corporation (S. 455).

Financial Year –

According to S. 2(41), a financial year is defined as the period ending on March 31st of each year for any corporation or body corporate. The first financial year of a firm that was formed on or after January 1st of the year will expire on March 31st of the following year.

If a holding company, subsidiary, or associate company of a company incorporated outside India is required to use a different financial year for consolidation of its accounts outside India, the Tribunal may, if satisfied, allow any period to be used as its financial year, whether or not that period is a year.

Types of Financial Statements –

1. Annual financial statements: Once a year, these are prepared.

2. Quarterly financial statements: These are prepared on a quarterly basis by listed firms in accordance with SEBI rules.

Section 129 of Companies Act 2013 –

Financial statements as per Companies Act 2013 must -

1. give a true and fair view of the state of affairs of the company or companies,

2. comply with the accounting standards notified under S. 133,

3. be in the form or forms as may be provided for different classes or classes of companies in Schedule III, and

4. the items contained in such financial statements must be in accordance with the accounting standards, according to Section 129(1) of the Companies Act, 2013.

The terms of Section 129(1), however, do not apply to any insurance or banking firm, any company engaged in the generation or supply of electricity, or any other class of company for whom a specific form of financial statement has been prescribed in or under the Act.

According to Section 129(2), the Board of Directors of a corporation must present financial accounts fo