Financial Statements of Companies (as per Schedule III)
This section covers Financial Statements of Companies as per Schedule III. BSEB tests the prescribed Balance Sheet and Statement of Profit and Loss format, current/non-current classification, notes, and computation of profit.
Core rules
- Schedule III requires the Balance Sheet in vertical form: shareholders’ funds, non-current liabilities, current liabilities, non-current assets and current assets.
- Statement of Profit and Loss shows revenue from operations, other income, expenses, finance costs, tax and profit after tax.
- Current assets include inventory, trade receivables, cash and cash equivalents, and short-term loans; current liabilities include trade payables, short-term borrowings, provisions and current maturities of long-term debt.
- Debit balance of Statement of Profit and Loss is shown as negative under reserves and surplus. Preliminary expenses are written off, not shown as an asset.
Worked example
Revenue from operations ₹20,00,000; other income ₹50,000; purchases ₹12,00,000; employee benefit expenses ₹2,00,000; finance costs ₹50,000; depreciation ₹1,00,000. Profit before tax = ₹20,00,000 + ₹50,000 − ₹12,00,000 − ₹2,00,000 − ₹50,000 − ₹1,00,000 = ₹5,00,000. Tax at 30% = ₹1,50,000. Profit after tax = ₹3,50,000.
Traps
Do not include GST in revenue or expenses. Show current maturities of long-term debt under current liabilities. Do not net off provisions against assets. Do not treat capital receipts as revenue. Do not show preliminary expenses as an asset.