Class 12th Chapters
- 10. Financial Statement of a Company
- 11. Accounting Ratios
- 12. Cash Flow Statement
- 13. Past Year Questions
Financial Statement of a Company
Topic - 1 | FINANCIAL STATEMENTS
Study Material & Notes

Study Material & Notes for the Chapter 8
FINANCIAL STATEMENTS
I. FINANCIAL STATEMENTS
- Every company registered under The Companies Act 2013 shall prepare its Balance Sheet, Statement of Profit and Loss and Notes to account thereto in accordance with the manner prescribed in the revised Schedule III to the Companies Act, 2013 to harmonise the disclosure requirement with the accounting standards and to converge with new reforms.
- The financial statements i.e., Balance sheet and Statement of Profit and Loss are required for external reporting and also for internal needs of the management like planning, decision-making and control.
- Balance Sheet: The Balance sheet shows all the assets owned by the concern, all the obligations or liabilities payable to outsiders or creditors and claims of the owners on a particular date. It is one of the important statements depicting the financial position or status or strength of an undertaking.
- Statement of Profit and Loss: The Statement of profit and loss is prepared for a specific period to determine the operational results of an undertaking. It is a statement of revenue earned and the expenses incurred for earning the revenue. It is a performance report showing the changes in income, expenses, profits and losses as a result of business operations during the year between two balance sheet dates.
Topic - 4 | CONTENTS OF THE BALANCE SHEET
Study Material & Notes

Study Material & Notes for the Chapter 8
FINANCIAL STATEMENTS
IV. Contents of the Balance Sheet
Category | Main Head | Sub-Head | Item |
---|---|---|---|
Liability | Shareholders’ Funds | Share Capital | Equity Shares |
Liability | Shareholders’ Funds | Share Capital | Preference Shares |
Liability | Shareholders’ Funds | Share Capital | Calls-in-Arrears (Less) |
Liability | Shareholders’ Funds | Reserves and Surplus | Forfeited Shares |
Liability | Shareholders’ Funds | Reserves and Surplus | Capital Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Capital Redemption Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Securities Premium Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Debentures redemption Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Revaluation Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Shares Options Outstanding Amount |
Liability | Shareholders’ Funds | Reserves and Surplus | Other Reserves |
Liability | Shareholders’ Funds | Reserves and Surplus | Surplus i.e., Balance in Statement of Profit and Loss (Profit/Loss) |
Liability | Non-Current Liabilities | Long-term Borrowings | Debentures |
Liability | Non-Current Liabilities | Long-term Borrowings | Bonds |
Liability | Non-Current Liabilities | Long-term Borrowings | Term Loan from Bank/Others |
Liability | Non-Current Liabilities | Long-term Borrowings | Public Deposits |
Liability | Non-Current Liabilities | Long-term Borrowings | Other Loans and Advances |
Liability | Non-Current Liabilities | Deferred Tax Liabilities (Net) | Deferred Tax Liabilities |
Liability | Non-Current Liabilities | Deferred Tax Liabilities (Net) | Deferred Tax Assets |
Liability | Non-Current Liabilities | Other Long-term Liabilities | Premium Payable on Redemption of Preference Shares |
Liability | Non-Current Liabilities | Long-term Provisions | Premium Payable on Redemption of Debentures |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Employees Retirement Benefits |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Gratuity |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Earned Leaves |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Warranty Claims |
Liability | Current Liabilities | Short-term Borrowings | Loans repayable on demand |
Liability | Current Liabilities | Short-term Borrowings | Bank Overdraft |
Liability | Current Liabilities | Short-term Borrowings | Cash Credit from Banks |
Liability | Current Liabilities | Short-term Borrowings | Current Maturities of Long-Term Debts |
Liability | Current Liabilities | Short-term Borrowings | Loans repayable within 12 months |
Liability | Current Liabilities | Short-term Borrowings | Deposits |
Liability | Current Liabilities | Short-term Borrowings | Other Loans and Advances |
Liability | Current Liabilities | Trade Payables | Sundry Creditors |
Liability | Current Liabilities | Trade Payables | Bills Payable |
Liability | Current Liabilities | Other Current Liabilities | Interest Accrued but not due on Borrowings |
Liability | Current Liabilities | Other Current Liabilities | Interest Accrued and due on Borrowings |
Liability | Current Liabilities | Other Current Liabilities | Income received in advance |
Liability | Current Liabilities | Other Current Liabilities | Unpaid Dividends |
Liability | Current Liabilities | Other Current Liabilities | Excess application money refundable and interest thereon |
Liability | Current Liabilities | Other Current Liabilities | Unpaid matured deposits and interest accrued thereon |
Liability | Current Liabilities | Other Current Liabilities | Unpaid matured debentures and interest accrued thereon |
Liability | Current Liabilities | Other Current Liabilities | Calls-in-Advance |
Liability | Current Liabilities | Other Current Liabilities | Outstanding Expenses |
Liability | Current Liabilities | Other Current Liabilities | Provident Funds Payable |
Liability | Current Liabilities | Other Current Liabilities | ESI Payable |
Liability | Current Liabilities | Other Current Liabilities | Other Payables within Operating Cycle/12 months |
Liability | Current Liabilities | Short-term Provisions | Provision for Employee Benefits (within Operating Cycle/12 months) |
Liability | Current Liabilities | Short-term Provisions | Provision for Expenses (within Operating Cycle/12 months) |
Liability | Current Liabilities | Short-term Provisions | Provision for Tax (within Operating Cycle/12 months) |
Liability | Current Liabilities | Short-term Provisions | Other Provisions (within Operating Cycle/12 months) |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Property Plant & Equipments |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Intangible Assets |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Capital Work in Progress |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Intangible Assets under Development |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Land |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Building |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Machinery |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Furniture & Fixtures |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Computers |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Vehicles |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Office Equipment |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Goodwill |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Brands |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Trademarks |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Computer Software |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Mining Rights |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Copy Rights |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Patents |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Licenses |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Franchise |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Capital Work in Progress | Tangible Assets under Construction |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets under Development | Patents under Development |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets under Development | Intellectual Property rights under Development |
Assets | Non-Current Assets | Non-Current Investments | Investments in Property (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Equity Instruments (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Preference Shares (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Government or Trust Securities (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Debentures (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Bonds (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Mutual Funds (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Partnership Firms (to be sold after 12 months) |
Assets | Non-Current Assets | Deferred Tax Assets (Net) | Deferred Tax Assets (Net) |
Assets | Non-Current Assets | Long-term Loan and Advances | Capital Advances (for tangible/intangible assets) |
Assets | Non-Current Assets | Long-term Loan and Advances | Long-term Loans to Employees |
Assets | Non-Current Assets | Long-term Loan and Advances | Long-term Advances to Vendors |
Assets | Non-Current Assets | Other Non-current Assets | Security Deposits given (> 12 months/Operating Cycle) |
Assets | Non-Current Assets | Other Non-current Assets | Long-term Trade Receivables (> 12 months/Operating Cycle) |
Assets | Non-Current Assets | Other Non-current Assets | Unamortized Expenses/Losses |
Assets | Non-Current Assets | Other Non-current Assets | Insurance Claims Recoverable |
Assets | Current Assets | Current Investments | Investments in Equity Instruments (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Preference Shares (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Government or Trust Securities (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Debentures (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Bonds (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Mutual Funds (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Partnership Firms (to be sold within 12 months) |
Assets | Current Assets | Inventories | Raw Materials |
Assets | Current Assets | Inventories | Work-in-Progress |
Assets | Current Assets | Inventories | Finished Goods |
Assets | Current Assets | Inventories | Stock-in-Trade |
Assets | Current Assets | Inventories | Goods Purchased for Trading |
Assets | Current Assets | Inventories | Stores & Spares |
Assets | Current Assets | Inventories | Loose Tools |
Assets | Current Assets | Trade Receivables | Debtors |
Assets | Current Assets | Trade Receivables | Provision for Doubtful Debts |
Assets | Current Assets | Trade Receivables | Bills Receivables |
Assets | Current Assets | Cash and Cash Equivalents | Cash in hand |
Assets | Current Assets | Cash and Cash Equivalents | Credit Balance as per Bank Accounts |
Assets | Current Assets | Cash and Cash Equivalents | Cheques in hand |
Assets | Current Assets | Cash and Cash Equivalents | Drafts in hand |
Assets | Current Assets | Cash and Cash Equivalents | Fixed Deposits with Banks |
Assets | Current Assets | Short-term Loans and Advances | Loans and Advances realized within 12 months/Operating Cycle |
Assets | Current Assets | Other Current Assets | Prepaid Expenses |
Assets | Current Assets | Other Current Assets | Accrued Income |
Assets | Current Assets | Other Current Assets | Dividend Receivable |
Assets | Current Assets | Other Current Assets | Advance Taxes |
Topic - 5 | Interest on Debentures:
Study Material & Notes

Study Material & Notes for the Chapter 9
COMPANY – ISSUE OF DEBENTURES
V. INTEREST ON DEBENTURES
- When a company issues debentures, it has to pay interest thereon at fixed percentage periodically (quarterly/half yearly/yearly) until debentures are repaid
- Interest is computed at the nominal value of debentures.
- This percentage is usually as part of the name of debentures like 8% debentures, 10% debentures, etc.
- Interest on debenture is a charge against the profit of the company and must be paid regularly even when Company suffers a loss or does not earn profits.
- According to Income Tax Act, 1961, a company paying interest on debentures is required to deduct income tax at the prescribed rate from the gross amount of debenture interest (if it exceeds the prescribed limit) before any payment is made to the debenture holders (Tax Deducted at Source).
Illustration
Debenture Face Value | Rs. 100 |
Number of Debentures | 10,000 |
Period | 6 months |
Interest rate | 9% per annum |
Profit & Loss A/c | Loss Rs. 75,00,000 |
Interest Amount | (10,000×100)x9%x6/12 = Rs. 45,000 |
Income Tax (TDS) @ 10% | 45,000×10% = Rs. 4,500/- |
Interest Net of TDS | 45,000-4,500=Rs. 40,500 |
Interest on Debentures – Accrual
- Interest may be paid periodically and the period may be quarterly, half-yearly or yearly
- The date of payment of interest may be coincide with the end of the accounting period
- For example interest is payable half yearly on 30th Jun and 31st December
- In this case, at the end of the accounting year on 31st March, interest for the period 1st Jan to 31st Mar needs to be accrued in the books of accounts
Topic - 6 | Writing Off Discount/Loss on Issue of Debentures:
Study Material & Notes

Study Material & Notes for the Chapter 9
COMPANY – ISSUE OF DEBENTURES
VI. WRITING OFF DISCOUNT/LOSS ON ISSUE OF DEBENTURES
- Discount or Loss on issue of debentures is a capital loss and is written-off in the year it is incurred i.e. in the year debentures are allotted.
- Discount or loss is written-off from the following:
- From Capital Reserve
- From Securities Premium Reserve [section 52(2)]
- From General Reserve
- Against revenue profits of the year
Past Year Question Papers with solutions
Accounting Ratios
Topic - 1 | FINANCIAL STATEMENTS
Study Material & Notes

Study Material & Notes for the Chapter 8
FINANCIAL STATEMENTS
I. FINANCIAL STATEMENTS
- Every company registered under The Companies Act 2013 shall prepare its Balance Sheet, Statement of Profit and Loss and Notes to account thereto in accordance with the manner prescribed in the revised Schedule III to the Companies Act, 2013 to harmonise the disclosure requirement with the accounting standards and to converge with new reforms.
- The financial statements i.e., Balance sheet and Statement of Profit and Loss are required for external reporting and also for internal needs of the management like planning, decision-making and control.
- Balance Sheet: The Balance sheet shows all the assets owned by the concern, all the obligations or liabilities payable to outsiders or creditors and claims of the owners on a particular date. It is one of the important statements depicting the financial position or status or strength of an undertaking.
- Statement of Profit and Loss: The Statement of profit and loss is prepared for a specific period to determine the operational results of an undertaking. It is a statement of revenue earned and the expenses incurred for earning the revenue. It is a performance report showing the changes in income, expenses, profits and losses as a result of business operations during the year between two balance sheet dates.
Topic - 4 | CONTENTS OF THE BALANCE SHEET
Study Material & Notes

Study Material & Notes for the Chapter 8
FINANCIAL STATEMENTS
IV. Contents of the Balance Sheet
Category | Main Head | Sub-Head | Item |
---|---|---|---|
Liability | Shareholders’ Funds | Share Capital | Equity Shares |
Liability | Shareholders’ Funds | Share Capital | Preference Shares |
Liability | Shareholders’ Funds | Share Capital | Calls-in-Arrears (Less) |
Liability | Shareholders’ Funds | Reserves and Surplus | Forfeited Shares |
Liability | Shareholders’ Funds | Reserves and Surplus | Capital Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Capital Redemption Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Securities Premium Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Debentures redemption Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Revaluation Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Shares Options Outstanding Amount |
Liability | Shareholders’ Funds | Reserves and Surplus | Other Reserves |
Liability | Shareholders’ Funds | Reserves and Surplus | Surplus i.e., Balance in Statement of Profit and Loss (Profit/Loss) |
Liability | Non-Current Liabilities | Long-term Borrowings | Debentures |
Liability | Non-Current Liabilities | Long-term Borrowings | Bonds |
Liability | Non-Current Liabilities | Long-term Borrowings | Term Loan from Bank/Others |
Liability | Non-Current Liabilities | Long-term Borrowings | Public Deposits |
Liability | Non-Current Liabilities | Long-term Borrowings | Other Loans and Advances |
Liability | Non-Current Liabilities | Deferred Tax Liabilities (Net) | Deferred Tax Liabilities |
Liability | Non-Current Liabilities | Deferred Tax Liabilities (Net) | Deferred Tax Assets |
Liability | Non-Current Liabilities | Other Long-term Liabilities | Premium Payable on Redemption of Preference Shares |
Liability | Non-Current Liabilities | Long-term Provisions | Premium Payable on Redemption of Debentures |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Employees Retirement Benefits |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Gratuity |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Earned Leaves |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Warranty Claims |
Liability | Current Liabilities | Short-term Borrowings | Loans repayable on demand |
Liability | Current Liabilities | Short-term Borrowings | Bank Overdraft |
Liability | Current Liabilities | Short-term Borrowings | Cash Credit from Banks |
Liability | Current Liabilities | Short-term Borrowings | Current Maturities of Long-Term Debts |
Liability | Current Liabilities | Short-term Borrowings | Loans repayable within 12 months |
Liability | Current Liabilities | Short-term Borrowings | Deposits |
Liability | Current Liabilities | Short-term Borrowings | Other Loans and Advances |
Liability | Current Liabilities | Trade Payables | Sundry Creditors |
Liability | Current Liabilities | Trade Payables | Bills Payable |
Liability | Current Liabilities | Other Current Liabilities | Interest Accrued but not due on Borrowings |
Liability | Current Liabilities | Other Current Liabilities | Interest Accrued and due on Borrowings |
Liability | Current Liabilities | Other Current Liabilities | Income received in advance |
Liability | Current Liabilities | Other Current Liabilities | Unpaid Dividends |
Liability | Current Liabilities | Other Current Liabilities | Excess application money refundable and interest thereon |
Liability | Current Liabilities | Other Current Liabilities | Unpaid matured deposits and interest accrued thereon |
Liability | Current Liabilities | Other Current Liabilities | Unpaid matured debentures and interest accrued thereon |
Liability | Current Liabilities | Other Current Liabilities | Calls-in-Advance |
Liability | Current Liabilities | Other Current Liabilities | Outstanding Expenses |
Liability | Current Liabilities | Other Current Liabilities | Provident Funds Payable |
Liability | Current Liabilities | Other Current Liabilities | ESI Payable |
Liability | Current Liabilities | Other Current Liabilities | Other Payables within Operating Cycle/12 months |
Liability | Current Liabilities | Short-term Provisions | Provision for Employee Benefits (within Operating Cycle/12 months) |
Liability | Current Liabilities | Short-term Provisions | Provision for Expenses (within Operating Cycle/12 months) |
Liability | Current Liabilities | Short-term Provisions | Provision for Tax (within Operating Cycle/12 months) |
Liability | Current Liabilities | Short-term Provisions | Other Provisions (within Operating Cycle/12 months) |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Property Plant & Equipments |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Intangible Assets |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Capital Work in Progress |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Intangible Assets under Development |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Land |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Building |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Machinery |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Furniture & Fixtures |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Computers |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Vehicles |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Office Equipment |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Goodwill |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Brands |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Trademarks |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Computer Software |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Mining Rights |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Copy Rights |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Patents |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Licenses |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Franchise |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Capital Work in Progress | Tangible Assets under Construction |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets under Development | Patents under Development |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets under Development | Intellectual Property rights under Development |
Assets | Non-Current Assets | Non-Current Investments | Investments in Property (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Equity Instruments (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Preference Shares (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Government or Trust Securities (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Debentures (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Bonds (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Mutual Funds (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Partnership Firms (to be sold after 12 months) |
Assets | Non-Current Assets | Deferred Tax Assets (Net) | Deferred Tax Assets (Net) |
Assets | Non-Current Assets | Long-term Loan and Advances | Capital Advances (for tangible/intangible assets) |
Assets | Non-Current Assets | Long-term Loan and Advances | Long-term Loans to Employees |
Assets | Non-Current Assets | Long-term Loan and Advances | Long-term Advances to Vendors |
Assets | Non-Current Assets | Other Non-current Assets | Security Deposits given (> 12 months/Operating Cycle) |
Assets | Non-Current Assets | Other Non-current Assets | Long-term Trade Receivables (> 12 months/Operating Cycle) |
Assets | Non-Current Assets | Other Non-current Assets | Unamortized Expenses/Losses |
Assets | Non-Current Assets | Other Non-current Assets | Insurance Claims Recoverable |
Assets | Current Assets | Current Investments | Investments in Equity Instruments (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Preference Shares (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Government or Trust Securities (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Debentures (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Bonds (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Mutual Funds (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Partnership Firms (to be sold within 12 months) |
Assets | Current Assets | Inventories | Raw Materials |
Assets | Current Assets | Inventories | Work-in-Progress |
Assets | Current Assets | Inventories | Finished Goods |
Assets | Current Assets | Inventories | Stock-in-Trade |
Assets | Current Assets | Inventories | Goods Purchased for Trading |
Assets | Current Assets | Inventories | Stores & Spares |
Assets | Current Assets | Inventories | Loose Tools |
Assets | Current Assets | Trade Receivables | Debtors |
Assets | Current Assets | Trade Receivables | Provision for Doubtful Debts |
Assets | Current Assets | Trade Receivables | Bills Receivables |
Assets | Current Assets | Cash and Cash Equivalents | Cash in hand |
Assets | Current Assets | Cash and Cash Equivalents | Credit Balance as per Bank Accounts |
Assets | Current Assets | Cash and Cash Equivalents | Cheques in hand |
Assets | Current Assets | Cash and Cash Equivalents | Drafts in hand |
Assets | Current Assets | Cash and Cash Equivalents | Fixed Deposits with Banks |
Assets | Current Assets | Short-term Loans and Advances | Loans and Advances realized within 12 months/Operating Cycle |
Assets | Current Assets | Other Current Assets | Prepaid Expenses |
Assets | Current Assets | Other Current Assets | Accrued Income |
Assets | Current Assets | Other Current Assets | Dividend Receivable |
Assets | Current Assets | Other Current Assets | Advance Taxes |
Topic - 5 | Interest on Debentures:
Study Material & Notes

Study Material & Notes for the Chapter 9
COMPANY – ISSUE OF DEBENTURES
V. INTEREST ON DEBENTURES
- When a company issues debentures, it has to pay interest thereon at fixed percentage periodically (quarterly/half yearly/yearly) until debentures are repaid
- Interest is computed at the nominal value of debentures.
- This percentage is usually as part of the name of debentures like 8% debentures, 10% debentures, etc.
- Interest on debenture is a charge against the profit of the company and must be paid regularly even when Company suffers a loss or does not earn profits.
- According to Income Tax Act, 1961, a company paying interest on debentures is required to deduct income tax at the prescribed rate from the gross amount of debenture interest (if it exceeds the prescribed limit) before any payment is made to the debenture holders (Tax Deducted at Source).
Illustration
Debenture Face Value | Rs. 100 |
Number of Debentures | 10,000 |
Period | 6 months |
Interest rate | 9% per annum |
Profit & Loss A/c | Loss Rs. 75,00,000 |
Interest Amount | (10,000×100)x9%x6/12 = Rs. 45,000 |
Income Tax (TDS) @ 10% | 45,000×10% = Rs. 4,500/- |
Interest Net of TDS | 45,000-4,500=Rs. 40,500 |
Interest on Debentures – Accrual
- Interest may be paid periodically and the period may be quarterly, half-yearly or yearly
- The date of payment of interest may be coincide with the end of the accounting period
- For example interest is payable half yearly on 30th Jun and 31st December
- In this case, at the end of the accounting year on 31st March, interest for the period 1st Jan to 31st Mar needs to be accrued in the books of accounts
Topic - 6 | Writing Off Discount/Loss on Issue of Debentures:
Study Material & Notes

Study Material & Notes for the Chapter 9
COMPANY – ISSUE OF DEBENTURES
VI. WRITING OFF DISCOUNT/LOSS ON ISSUE OF DEBENTURES
- Discount or Loss on issue of debentures is a capital loss and is written-off in the year it is incurred i.e. in the year debentures are allotted.
- Discount or loss is written-off from the following:
- From Capital Reserve
- From Securities Premium Reserve [section 52(2)]
- From General Reserve
- Against revenue profits of the year
Past Year Question Papers with solutions
Cash Flow Statement
Topic - 1 | FINANCIAL STATEMENTS
Study Material & Notes

Study Material & Notes for the Chapter 8
FINANCIAL STATEMENTS
I. FINANCIAL STATEMENTS
- Every company registered under The Companies Act 2013 shall prepare its Balance Sheet, Statement of Profit and Loss and Notes to account thereto in accordance with the manner prescribed in the revised Schedule III to the Companies Act, 2013 to harmonise the disclosure requirement with the accounting standards and to converge with new reforms.
- The financial statements i.e., Balance sheet and Statement of Profit and Loss are required for external reporting and also for internal needs of the management like planning, decision-making and control.
- Balance Sheet: The Balance sheet shows all the assets owned by the concern, all the obligations or liabilities payable to outsiders or creditors and claims of the owners on a particular date. It is one of the important statements depicting the financial position or status or strength of an undertaking.
- Statement of Profit and Loss: The Statement of profit and loss is prepared for a specific period to determine the operational results of an undertaking. It is a statement of revenue earned and the expenses incurred for earning the revenue. It is a performance report showing the changes in income, expenses, profits and losses as a result of business operations during the year between two balance sheet dates.
Topic - 4 | CONTENTS OF THE BALANCE SHEET
Study Material & Notes

Study Material & Notes for the Chapter 8
FINANCIAL STATEMENTS
IV. Contents of the Balance Sheet
Category | Main Head | Sub-Head | Item |
---|---|---|---|
Liability | Shareholders’ Funds | Share Capital | Equity Shares |
Liability | Shareholders’ Funds | Share Capital | Preference Shares |
Liability | Shareholders’ Funds | Share Capital | Calls-in-Arrears (Less) |
Liability | Shareholders’ Funds | Reserves and Surplus | Forfeited Shares |
Liability | Shareholders’ Funds | Reserves and Surplus | Capital Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Capital Redemption Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Securities Premium Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Debentures redemption Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Revaluation Reserve |
Liability | Shareholders’ Funds | Reserves and Surplus | Shares Options Outstanding Amount |
Liability | Shareholders’ Funds | Reserves and Surplus | Other Reserves |
Liability | Shareholders’ Funds | Reserves and Surplus | Surplus i.e., Balance in Statement of Profit and Loss (Profit/Loss) |
Liability | Non-Current Liabilities | Long-term Borrowings | Debentures |
Liability | Non-Current Liabilities | Long-term Borrowings | Bonds |
Liability | Non-Current Liabilities | Long-term Borrowings | Term Loan from Bank/Others |
Liability | Non-Current Liabilities | Long-term Borrowings | Public Deposits |
Liability | Non-Current Liabilities | Long-term Borrowings | Other Loans and Advances |
Liability | Non-Current Liabilities | Deferred Tax Liabilities (Net) | Deferred Tax Liabilities |
Liability | Non-Current Liabilities | Deferred Tax Liabilities (Net) | Deferred Tax Assets |
Liability | Non-Current Liabilities | Other Long-term Liabilities | Premium Payable on Redemption of Preference Shares |
Liability | Non-Current Liabilities | Long-term Provisions | Premium Payable on Redemption of Debentures |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Employees Retirement Benefits |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Gratuity |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Earned Leaves |
Liability | Non-Current Liabilities | Long-term Provisions | Provision for Warranty Claims |
Liability | Current Liabilities | Short-term Borrowings | Loans repayable on demand |
Liability | Current Liabilities | Short-term Borrowings | Bank Overdraft |
Liability | Current Liabilities | Short-term Borrowings | Cash Credit from Banks |
Liability | Current Liabilities | Short-term Borrowings | Current Maturities of Long-Term Debts |
Liability | Current Liabilities | Short-term Borrowings | Loans repayable within 12 months |
Liability | Current Liabilities | Short-term Borrowings | Deposits |
Liability | Current Liabilities | Short-term Borrowings | Other Loans and Advances |
Liability | Current Liabilities | Trade Payables | Sundry Creditors |
Liability | Current Liabilities | Trade Payables | Bills Payable |
Liability | Current Liabilities | Other Current Liabilities | Interest Accrued but not due on Borrowings |
Liability | Current Liabilities | Other Current Liabilities | Interest Accrued and due on Borrowings |
Liability | Current Liabilities | Other Current Liabilities | Income received in advance |
Liability | Current Liabilities | Other Current Liabilities | Unpaid Dividends |
Liability | Current Liabilities | Other Current Liabilities | Excess application money refundable and interest thereon |
Liability | Current Liabilities | Other Current Liabilities | Unpaid matured deposits and interest accrued thereon |
Liability | Current Liabilities | Other Current Liabilities | Unpaid matured debentures and interest accrued thereon |
Liability | Current Liabilities | Other Current Liabilities | Calls-in-Advance |
Liability | Current Liabilities | Other Current Liabilities | Outstanding Expenses |
Liability | Current Liabilities | Other Current Liabilities | Provident Funds Payable |
Liability | Current Liabilities | Other Current Liabilities | ESI Payable |
Liability | Current Liabilities | Other Current Liabilities | Other Payables within Operating Cycle/12 months |
Liability | Current Liabilities | Short-term Provisions | Provision for Employee Benefits (within Operating Cycle/12 months) |
Liability | Current Liabilities | Short-term Provisions | Provision for Expenses (within Operating Cycle/12 months) |
Liability | Current Liabilities | Short-term Provisions | Provision for Tax (within Operating Cycle/12 months) |
Liability | Current Liabilities | Short-term Provisions | Other Provisions (within Operating Cycle/12 months) |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Property Plant & Equipments |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Intangible Assets |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Capital Work in Progress |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets | Intangible Assets under Development |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Land |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Building |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Machinery |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Furniture & Fixtures |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Computers |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Vehicles |
Assets | Non-Current Assets | Property, Plant and Equipment and Intangible Assets-Property Plant & Equipments | Office Equipment |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Goodwill |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Brands |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Trademarks |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Computer Software |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Mining Rights |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Copy Rights |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Patents |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Licenses |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets | Franchise |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Capital Work in Progress | Tangible Assets under Construction |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets under Development | Patents under Development |
Assets | Non-Current Assets | Property, Plant & Equipment and Intangible Assets-Intangible Assets under Development | Intellectual Property rights under Development |
Assets | Non-Current Assets | Non-Current Investments | Investments in Property (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Equity Instruments (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Preference Shares (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Government or Trust Securities (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Debentures (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Bonds (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Mutual Funds (to be sold after 12 months) |
Assets | Non-Current Assets | Non-Current Investments | Investments in Partnership Firms (to be sold after 12 months) |
Assets | Non-Current Assets | Deferred Tax Assets (Net) | Deferred Tax Assets (Net) |
Assets | Non-Current Assets | Long-term Loan and Advances | Capital Advances (for tangible/intangible assets) |
Assets | Non-Current Assets | Long-term Loan and Advances | Long-term Loans to Employees |
Assets | Non-Current Assets | Long-term Loan and Advances | Long-term Advances to Vendors |
Assets | Non-Current Assets | Other Non-current Assets | Security Deposits given (> 12 months/Operating Cycle) |
Assets | Non-Current Assets | Other Non-current Assets | Long-term Trade Receivables (> 12 months/Operating Cycle) |
Assets | Non-Current Assets | Other Non-current Assets | Unamortized Expenses/Losses |
Assets | Non-Current Assets | Other Non-current Assets | Insurance Claims Recoverable |
Assets | Current Assets | Current Investments | Investments in Equity Instruments (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Preference Shares (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Government or Trust Securities (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Debentures (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Bonds (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Mutual Funds (to be sold within 12 months) |
Assets | Current Assets | Current Investments | Investments in Partnership Firms (to be sold within 12 months) |
Assets | Current Assets | Inventories | Raw Materials |
Assets | Current Assets | Inventories | Work-in-Progress |
Assets | Current Assets | Inventories | Finished Goods |
Assets | Current Assets | Inventories | Stock-in-Trade |
Assets | Current Assets | Inventories | Goods Purchased for Trading |
Assets | Current Assets | Inventories | Stores & Spares |
Assets | Current Assets | Inventories | Loose Tools |
Assets | Current Assets | Trade Receivables | Debtors |
Assets | Current Assets | Trade Receivables | Provision for Doubtful Debts |
Assets | Current Assets | Trade Receivables | Bills Receivables |
Assets | Current Assets | Cash and Cash Equivalents | Cash in hand |
Assets | Current Assets | Cash and Cash Equivalents | Credit Balance as per Bank Accounts |
Assets | Current Assets | Cash and Cash Equivalents | Cheques in hand |
Assets | Current Assets | Cash and Cash Equivalents | Drafts in hand |
Assets | Current Assets | Cash and Cash Equivalents | Fixed Deposits with Banks |
Assets | Current Assets | Short-term Loans and Advances | Loans and Advances realized within 12 months/Operating Cycle |
Assets | Current Assets | Other Current Assets | Prepaid Expenses |
Assets | Current Assets | Other Current Assets | Accrued Income |
Assets | Current Assets | Other Current Assets | Dividend Receivable |
Assets | Current Assets | Other Current Assets | Advance Taxes |
Topic - 5 | Interest on Debentures:
Study Material & Notes

Study Material & Notes for the Chapter 9
COMPANY – ISSUE OF DEBENTURES
V. INTEREST ON DEBENTURES
- When a company issues debentures, it has to pay interest thereon at fixed percentage periodically (quarterly/half yearly/yearly) until debentures are repaid
- Interest is computed at the nominal value of debentures.
- This percentage is usually as part of the name of debentures like 8% debentures, 10% debentures, etc.
- Interest on debenture is a charge against the profit of the company and must be paid regularly even when Company suffers a loss or does not earn profits.
- According to Income Tax Act, 1961, a company paying interest on debentures is required to deduct income tax at the prescribed rate from the gross amount of debenture interest (if it exceeds the prescribed limit) before any payment is made to the debenture holders (Tax Deducted at Source).
Illustration
Debenture Face Value | Rs. 100 |
Number of Debentures | 10,000 |
Period | 6 months |
Interest rate | 9% per annum |
Profit & Loss A/c | Loss Rs. 75,00,000 |
Interest Amount | (10,000×100)x9%x6/12 = Rs. 45,000 |
Income Tax (TDS) @ 10% | 45,000×10% = Rs. 4,500/- |
Interest Net of TDS | 45,000-4,500=Rs. 40,500 |
Interest on Debentures – Accrual
- Interest may be paid periodically and the period may be quarterly, half-yearly or yearly
- The date of payment of interest may be coincide with the end of the accounting period
- For example interest is payable half yearly on 30th Jun and 31st December
- In this case, at the end of the accounting year on 31st March, interest for the period 1st Jan to 31st Mar needs to be accrued in the books of accounts
Topic - 6 | Writing Off Discount/Loss on Issue of Debentures:
Study Material & Notes

Study Material & Notes for the Chapter 9
COMPANY – ISSUE OF DEBENTURES
VI. WRITING OFF DISCOUNT/LOSS ON ISSUE OF DEBENTURES
- Discount or Loss on issue of debentures is a capital loss and is written-off in the year it is incurred i.e. in the year debentures are allotted.
- Discount or loss is written-off from the following:
- From Capital Reserve
- From Securities Premium Reserve [section 52(2)]
- From General Reserve
- Against revenue profits of the year
Past Year Question Papers with solutions
Past Year Papers
SESSION 2020-21

Study Material & Notes for the Chapter 2
Partnership – Goodwill
I. GOODWILL – DEFINITION & FEATURES
A. Goodwill
Goodwill is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in customers. It is one factor which distinguishes an old established business from a new business at its first start.
- Good will = Good name or Reputation
- Is an Intangible asset…cannot be seen or touched
- Places an enterprise at an advantageous position due to efforts made in the past
- Enterprise is able to earn higher profits without extra efforts
B. Factors affecting valuation of Goodwill
C. Need for valuation of Goodwill
- At the time of admission, retirement or death of a partner.
- Change in the profit-sharing ratio amongst the existing partners.
- When the partnership firm is sold out.
- When the firms amalgamate (merge)
- When the firm is converted into Company
D. Classification of Goodwill
1) Purchased (Acquired) Goodwill
- It is the goodwill that is acquired by a business after paying consideration in cash or in kind.
- For example, consideration paid Rs. 10 lacs for purchase of a business wherein Assets acquired valued Rs. 20 lacs & Liabilities taken over for Rs. 12 lacs. Extra Rs. 2 Lacs is paid here for Goodwill.
2) Self Generated Goodwill
- It is internally generated or hard-earned goodwill which arises due to continued hard work of the organization, its better-quality products and better customer services.
- Self-generated goodwill is not recorded in the books because no consideration in money or money’s worth is paid for it.
Important to Note: As per AS-26 Goodwill should not be recorded in books unless it is purchased

Study Material & Notes for the Chapter 2
Partnership – Goodwill
I. GOODWILL – DEFINITION & FEATURES
A. Goodwill
Goodwill is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in customers. It is one factor which distinguishes an old established business from a new business at its first start.
- Good will = Good name or Reputation
- Is an Intangible asset…cannot be seen or touched
- Places an enterprise at an advantageous position due to efforts made in the past
- Enterprise is able to earn higher profits without extra efforts
B. Factors affecting valuation of Goodwill
C. Need for valuation of Goodwill
- At the time of admission, retirement or death of a partner.
- Change in the profit-sharing ratio amongst the existing partners.
- When the partnership firm is sold out.
- When the firms amalgamate (merge)
- When the firm is converted into Company
D. Classification of Goodwill
1) Purchased (Acquired) Goodwill
- It is the goodwill that is acquired by a business after paying consideration in cash or in kind.
- For example, consideration paid Rs. 10 lacs for purchase of a business wherein Assets acquired valued Rs. 20 lacs & Liabilities taken over for Rs. 12 lacs. Extra Rs. 2 Lacs is paid here for Goodwill.
2) Self Generated Goodwill
- It is internally generated or hard-earned goodwill which arises due to continued hard work of the organization, its better-quality products and better customer services.
- Self-generated goodwill is not recorded in the books because no consideration in money or money’s worth is paid for it.
Important to Note: As per AS-26 Goodwill should not be recorded in books unless it is purchased

2020-21 Sample
Sample Papers
Session 2019-20
