Final Accounts Prescribed by Company Act and Accounting Standard
Nepal Accounting Standard (NAS) has prescribed the formats for financial statements.
Nepal Financial Reporting Standards (NFRS) follows rules and regulation of NAS.
All the business organizations need to consider the prescribed format of the accounting standard for preparation and submission of final accounts.
Final accounts involve the following statements:
· Income Statement (Profit or Loss Statement)
· Balance sheet (Statement of Financial Position)
An income statement shows the net result of the business operations during an accounting period.
It may include manufacturing account, trading account, profit and loss account, profit and loss appropriation account.
Income statement presents the summary of revenues, expenses and net income or net loss of a firm.
It serves as a profitability measure of the firm.
The amount received from operating activities is known as revenue income.
It is the income earned from goods selling or services provide.
It also includes received of discount, commission, interest, transfer fees etc.
Expenditure is incurred for the running productivity or earning capacity of a business.
Such expenditure yields benefits in current accounting period.
It involves all the accounting transactions of trading account, profit and loss account and profit and loss appropriation account.
It considers a vertical format of income statement (profit or loss statement) the specimen of which is shown below:
Profit or Loss Statement
For the year ended 31st March 20XX
Particulars |
Notes |
Year 2020 |
Year 2019 |
|
Sales revenue (net) |
|
xxxx |
xxxx |
|
Add: Other income |
|
xxxx |
xxxx |
|
Less: |
Cost of goods sold* |
|
(xxx) |
(xxx) |
|
Gross profit/margin |
|
xxxx |
xxxx |
Less: |
Operating expenses: |
|
|
|
|
Administrative expenses |
|
xxxx |
xxxx |
|
Selling expenses |
|
xxxx |
xxxx |
|
Distribution expenses |
|
xxxx |
xxxx |
|
Depreciation |
|
xxxx |
xxxx |
|
Profit from operation |
|
xxxx |
xxxx |
Less: |
Financial expenses: |
|
|
|
|
Interest |
|
(xxx) |
(xxx) |
|
Profit before tax |
|
xxxx |
xxxx |
Less: |
Income tax expenses |
|
(xxx) |
(xxx) |
|
Profit from continuing operations |
|
xxxx |
xxxx |
|
Profit (Loss) on Discontinued operation (net tax) |
|
± xxx |
± xxx |
|
Net profit for the year |
|
xxxx |
xxxx |
|
Basic earnings per share |
|
|
|
|
Diluted Earnings per share |
|
|
|
Cost of goods sold (COGS):
Opening stock xxxx |
xxxx |
|
Purchase (net) xxxx |
xxxx |
|
Carriage or freight on purchase |
xxxx |
|
Less: closing stock |
(xxx) |
|
COGS |
xxxx |
|
Particulars |
Notes |
Year 2020 |
Year 2019 |
Opening retained earnings |
|
xxxx |
xxxx |
Add: Net profit for the year |
|
xxxx |
xxxx |
Less: Proposed dividend |
|
(xxx) |
(xxx) |
Less: Reserve fund |
|
(xxx) |
(xxx) |
Closing retaining earnings |
|
xxxx |
xxxx |
Balance sheet is not an account; it is a statement of assets and liabilities of a business organization at an accounting period.
It is a statement summarizing the financial position of firm.
The balance sheet is prepared at the end or accounting period.
It is prepared after preparation income statement (manufacturing account, trading, profit and loss account).
It is the statement of balances of ledger account, which are not included in income statement.
Therefore, it is called the balance sheet.
The balance sheet contains assets and liabilities.
Liabilities refer to the financial obligation of an enterprise.
Assets refer to tangible or intangible rights owned by an enterprise.
ABC Company Ltd
For the year ended ………………………..
Particulars |
Notes |
Year 2020 |
Year 2019 |
|
ASSETS |
|
|
|
|
Non-Current Assets: |
|
|
|
|
|
Property, plant and equipment |
|
xxxx |
xxxx |
|
Vehicles |
|
xxxx |
xxxx |
|
Intangible assets |
|
xxxx |
xxxx |
|
Biological assets (long-term) |
|
xxxx |
xxxx |
|
Investment property |
|
xxxx |
xxxx |
|
Investment in associates |
|
xxxx |
xxxx |
|
Other investment |
|
xxxx |
xxxx |
|
Long-term receivable (notes receivable) |
|
xxxx |
xxxx |
|
Deferred tax assets |
|
xxxx |
xxxx |
|
Total non-current assets (A) |
|
xxxx |
xxxx |
Current Assets: |
|
|
|
|
|
Inventories |
|
xxxx |
xxxx |
|
Trade receivable (debtor, B/R, A/R) |
|
xxxx |
xxxx |
|
Cash and cash equivalent |
|
xxxx |
xxxx |
|
Short-term investment |
|
xxxx |
xxxx |
|
Income tax receivable |
|
xxxx |
xxxx |
|
Other receivables |
|
xxxx |
xxxx |
|
Asset held for sale |
|
xxxx |
xxxx |
|
Total current assets (B) |
|
xxxx |
xxxx |
|
TOTAL ASSETS (A+B) |
|
xxxxx |
xxxxx |
|
|
|
|
|
EQUITY |
|
|
|
|
|
Equity share capital |
|
xxxx |
xxxx |
|
Reserve and funds |
|
xxxx |
xxxx |
|
Retained earnings |
|
xxxx |
xxxx |
|
Preference share capital |
|
xxxx |
xxxx |
|
Non-controlling interest |
|
xxxx |
xxxx |
|
Total Equity |
|
xxxxx |
xxxxx |
|
|
|
|
|
LIABILITIES |
|
|
|
|
Non-Current Liabilities: |
|
|
|
|
|
Loan and borrowings (long-term) |
|
xxxx |
xxxx |
|
Employees benefits |
|
xxxx |
xxxx |
|
Government grants |
|
xxxx |
xxxx |
|
Derivative financial liabilities |
|
xxxx |
xxxx |
|
Provisions (long-term) |
|
xxxx |
xxxx |
|
Deferred tax liabilities |
|
xxxx |
xxxx |
|
Total non-current liabilities (a) |
|
xxxxx |
xxxxx |
Current Liabilities: |
|
|
|
|
|
Loan and borrowings (short term) |
|
xxxx |
xxxx |
|
Trade payables (creditor, B/P, A/P) |
|
xxxx |
xxxx |
|
Income tax liability |
|
xxxx |
xxxx |
|
Employees benefits |
|
xxxx |
xxxx |
|
Provisions (short-term) |
|
xxxx |
xxxx |
|
Other payables |
|
xxxx |
xxxx |
|
Liability of asset held for sale |
|
xxxx |
xxxx |
|
Total current liabilities (b) |
|
xxxxx |
xxxxx |
|
Total Liabilities (a+b) |
|
xxxxx |
xxxxx |
|
TOTAL EQUITY AND LIABILITIES |
|
xxxxx |
xxxxx |
#####
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|
Share (Accounting for Share) |
|
Share in Nepali |
|
Debentures |
|
Final Account: Class 12 |
|
Final Account in Nepali |
|
Work Sheet |
|
Ratio Analysis (Accounting Ratio) |
|
Fund Flow Statement |
|
Cash Flow Statement |
|
Theory Accounting Xii |
|
Theory: Cost Accounting |
|
Cost Accounting |
|
LIFO−FIFO |
|
Cost Sheet, Unit Costing |
|
Cost Reconciliation Statement |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 6
EP Publication (P) has the following trail balance for the year ended 31st March 2019: (amount in ’00)
Particulars |
Amount |
|
Particulars |
Amount |
Cost of goods sold |
121,579 |
|
Sales revenue |
166,517 |
Administration expenses |
9,919 |
|
Other income |
3,625 |
Distribution expenses |
10,101 |
|
Share capital |
53,497 |
Other operating expenses |
7,875 |
|
Reserves |
7,428 |
Interest on loan |
842 |
|
Retained earnings (beginning) |
931 |
Loss on discontinued outlay |
410 |
|
Non-controlling interests |
3,107 |
Property and equipment |
65,624 |
|
Bank loan |
10,176 |
Depreciation |
13,684 |
|
Pension fund |
6,785 |
Intangible assets |
3,162 |
|
Derivative financial liability |
56 |
Investment property total |
7,847 |
|
Provisions long-term |
930 |
Other investment |
365 |
|
Deferred tax liabilities (long-term) |
1,706 |
Notes receivable (long-term) |
4,791 |
|
Bank overdraft |
16,076 |
Inventories |
19,425 |
|
Trade payables |
15,571 |
Short-term fixed deposit |
1,613 |
|
Income tax liability |
2,342 |
Trade receivables |
14,452 |
|
Bonus payable to employees |
1,696 |
Cash and bank |
18 |
|
Other payable |
20 |
Assets held for sale |
8,756 |
|
|
|
|
290,463 |
|
|
290,463 |
Additional information:
a. Company pays dividend 25%
b. Board of directors proposed dib Rs 2,675.
c. Transfer to reserve fund Rs 479.
Required: (a) Income statement (profit or loss statement) as per NFRS; (b) Retained earnings account
(c) Balance sheet (statement of financial position) as per NFRS
[Answer: (a) Net profit = 4,196; (b) Ending RE = 1,973; (c) BS = 126,053]
SOLUTION
Profit or Loss Statement
EP Publication (P) Ltd
For the year ended 31st March 2019
Particulars |
Notes |
Year 2019 |
|
|
Sales revenue (net) |
|
166,517 |
|
|
Add: Other income |
|
3,625 |
|
|
Less: |
Cost of goods sold |
|
(121,579) |
|
|
Gross profit/margin |
|
48,563 |
|
Less: |
Operating expenses: |
|
|
|
|
Administrative expenses |
|
(9,919) |
|
|
Distribution expenses |
|
(10,101) |
|
|
Other operating expenses |
|
(7,875) |
|
|
Depreciation |
|
(13,684) |
|
|
Profit from operation |
|
6,984 |
|
Less: |
Financial expenses: |
|
|
|
|
Interest |
|
(842) |
|
|
Profit before tax |
|
6,142 |
|
Less: |
Income tax payable (6,142@25%) |
|
(1,536) |
|
|
Profit from continuing operations |
|
4,606 |
|
Less |
Loss on discontinued outlay |
|
(410) |
|
|
Net profit for the year |
|
4,196 |
|
|
Basic earnings per share |
|
|
|
|
Diluted Earnings per share |
|
|
|
Retained Earrings Account
Particulars |
|
Amount |
|
Opening retained earnings |
|
931 |
|
Add: Net profit for the year |
|
4,196 |
|
Less: Proposed dividend |
|
(2,675) |
|
Less: Reserve fund |
|
(479) |
|
Closing retaining earnings |
|
1,973 |
|
Statement of Financial Position
EP Publication (P) Ltd
For the year ended 31st March 2019
Particulars |
Notes |
Year 2019 |
|
|
ASSETS |
|
|
|
|
Non-Current Assets: |
|
|
|
|
|
Property, plant and equipment |
|
65,624 |
|
|
Vehicles |
|
– |
|
|
Intangible assets |
|
3,162 |
|
|
Biological assets (long-term) |
|
– |
|
|
Investment property |
|
7,847 |
|
|
Investment in associates |
|
– |
|
|
Other investment |
|
365 |
|
|
Long-term receivable (notes receivable) |
|
4,791 |
|
|
Deferred tax assets |
|
– |
|
|
Total non-current assets (A) |
|
81,789 |
|
Current Assets: |
|
|
|
|
|
Inventories |
|
19,425 |
|
|
Trade receivable (debtor, B/R, A/R) |
|
14,452 |
|
|
Cash and cash equivalent |
|
18 |
|
|
Short-term fixed deposit |
|
1,613 |
|
|
Income tax receivable |
|
– |
|
|
Other receivables |
|
– |
|
|
Asset held for sale |
|
8,756 |
|
|
Total current assets (B) |
|
44,264 |
|
|
TOTAL ASSETS (A+B) |
|
126,053 |
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
Equity share capital |
|
53,497 |
|
|
Reserve and funds |
1 |
7,907 |
|
|
Retained earnings |
|
1,973 |
|
|
Preference share capital |
|
– |
|
|
Non-controlling interest |
|
3,107 |
|
|
Total Equity |
|
66,484 |
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Non-Current Liabilities: |
|
|
|
|
|
Loan and borrowings (long-term) |
|
10,176 |
|
|
Employees benefits (pension fund) |
|
6,785 |
|
|
Government grants |
|
– |
|
|
Derivative financial liabilities |
|
56 |
|
|
Provisions (long-term) |
|
930 |
|
|
Deferred tax liabilities |
|
1,706 |
|
|
Total non-current liabilities (a) |
|
19,653 |
|
Current Liabilities: |
|
|
|
|
|
Loan and borrowings (BOD) |
|
16,076 |
|
|
Trade payables (creditor, B/P, A/P) |
|
15,571 |
|
|
Income tax liability |
2 |
3,878 |
|
|
Bonus payable to employees |
|
1,696 |
|
|
Proposed dividend |
|
2,675 |
|
|
Other payables |
|
20 |
|
|
Liability of asset held for sale |
|
– |
|
|
Total current liabilities (b) |
|
39,916 |
|
|
Total Liabilities (a+b) |
|
59,569 |
|
|
TOTAL EQUITY AND LIABILITIES |
|
126,053 |
|
Given and working notes:
1 |
Reserve and fund (old) |
7,428 |
|
2 |
Income tax liability (old) |
2,342 |
|
Add: New reserve |
479 |
|
|
Add: New |
1,536 |
|
|
7,907 |
|
|
|
3,878 |
|
|
|
|
|
|
|
#####
PROBLEM AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 6A
EP Publication (P) has the following trail balance for the year ended 31st March 2020: (amount in ’00)
Name of ledgers |
Amount Dr |
|
Name of ledgers |
Amount Cr |
Cost og goods sold |
138,410 |
|
Sales revenue |
175,278 |
Administration expenses |
9,164 |
|
Other income |
3,068 |
Selling expenses |
9,264 |
|
Profit on discontinued business |
374 |
Other operating expenses |
9,380 |
|
Share capital @ Rs 10 each |
58,000 |
Interest on loan |
575 |
|
Reserves |
7,568 |
Property and equipment |
48,745 |
|
Non-controlling interests |
3,587 |
Depreciation |
10,683 |
|
Bank loan |
14,292 |
Intangible assets |
5,917 |
|
Pension fund |
8,452 |
Investment property total |
5,334 |
|
Derivative financial liability |
43 |
Deferred tax assets |
211 |
|
Provisions long-term |
1,303 |
Notes receivable (long-term) |
3,930 |
|
Deferred tax liabilities (long-term) |
1,451 |
Inventories |
21,194 |
|
Bank overdraft |
15,230 |
Short-term investment |
2,762 |
|
Trade payables |
14,584 |
Trade receivables |
16,693 |
|
Income tax liability |
2,644 |
Cash and bank |
21,765 |
|
Employees benefits |
2,817 |
Assets held for sale |
5,316 |
|
Provisions short-term |
652 |
|
309,343 |
|
|
309,343 |
Additional information:
Company pays tax @25%
Required: (a) Income statement (profit or loss statement) as per NFRS;
(b) Balance sheet (statement of financial position) as per NFRS
[Answer: (a) Net profit = 1,026; (b) BS = 131,867]
#####
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