Chapters 8 and 9 are devoted to accounting for special transactions i.e. Terms of Service 7. 5,400 (‘000); (ii) Provision to be made for Income-tax in Rs. It determines the financial … The Tariffs and Development Control Reserve shall be available for disposal only to the extent by which the clear profit is less than the reasonable return in any year of account. Dec 23, 2020 - Accounts of Electricity Companies - Electricity Companies, Advanced Corporate Accounting B Com Notes | EduRev is made by best teachers of B Com. It is the difference between the total expenditure (including special appropriation). 3,51,450) must be refunded to the company u/s 309 (5A). Objectives of Final Accounts Balance Sheet Trading account, Profit and Loss account and Balance Sheet together are called final accounts. Preparation of Profit and Loss Account of a Company: The following balance appeared in the books … The Enron scandal was an accounting scandal involving Enron Corporation, an American energy company based in Houston, Texas.Upon being publicized in October 2001, the company declared bankruptcy and its accounting firm, Arthur Andersen – then one of the five largest audit and accountancy partnerships in the world – was effectively dissolved. (8) The company had a contract for the erection Of machinery at Rs. (vi) The amounts standing to the credit of the Development Reserve at the close of the year of account. (IPCC Gr-II) Important Changes: The earlier syllabus (study material of ICAI) included the following, in this chapter: 1. The profit and loss account, instead of starting with gross profit, will commence with the income from the business activity, such as 'fees', 'income from clients', 'charges', 'work done'. Some of the above prescribed forms are presented: It has already been stated earlier that there are some financial provisions contained in the Sixth and Seventh Schedules of the Electricity (Supply) Act. The trading account shows the gross profit or gross loss, net profit or net loss is calculated from profit and loss account and balance sheet is prepared to know the position of assets and liabilities.” – O. P. Gupta. Saharanpur Electricity Ltd. earned a profit of Rs. (4) Schedules need not be given. Learning objectives have been incorporated at the beginning of each chapter/unit to guide the students about the knowledge they should acquire after studying the chapters. Interest on accumulated balance will, however, be allowed as an expense from revenue. In addition, certain entries are 100 each, fully paid-up. The amount of such reserve shall be invested in trust securities and the investment must be made within a period of 6 months from the date of appropriation. Company financial statements consist of: Income statement (profit and loss account) Statement of changes in equity From the following particulars furnished by Pioneer Ltd. prepare the Balance Sheet as at 31st March 1998, as required by Part I, Schedule VI of the Companies Act. Final accounts gives an idea about the profitability and financial position of a business to its management, owners, and other interested parties. Failure … The most important and crucial function of financial accounting is to ascertain the financial position and the profitability of the business. According to paragraph XVII of the Sixth Schedule, the clear profit may be calculated as under: According to sub-paragraph (9) of paragraph XVII of Sixth Schedule, the reasonable return means the sum of the following items in respect of any year: (i) A standard rate of interest (bank rate) plus 2% on the Capital Base, (ii) Income derived from investments other than those included in the Capital Base, (iii) An amount equal to on the loans advanced by the State Electricity Board, (iv) An amount equal to ½% on the amounts borrowed from approved financial institutions, (v) An amount equal to ½% on the amount realised by the issue of debentures. The Company Final Accounts consists of: 1. (b) Prepare the Balance Sheet of the company, based on all the above. According to sub-paragraph (1) of paragraph XVII of the Sixth Schedule, amount of capital base is the sum of the following items: (i) The original cost of fixed assets available for use and necessary for the purpose of the undertaking less the cost of service lines contributed by consumers. (a) Show the computation of commission to the Managing Directors, and. Browse more Topics under Final Accounts “Final accounts consist of trading account, profit and loss account and balance sheet. When any fixed asset is discarded due to obsolescence or any other reason, the w.d.v. Final Accounts as per Double Account System which included Revenue A/c, Net Revenue A/c, Receipt & … Expected Life of Fixed Assets of electricity (as prescribed by the Vllth Schedule) are given below in brief: It has already been stated earlier that at the time of computing Capital Base contribu­tion received from customers towards the cost of service connections are to be deducted from the capital outlay. Statements I and II resemble the ‘Receipts and Expenditure on Capital’ under Double Account System, stated earlier whereas, Statements III and IV; constitute the ‘Revenue Account’ Statement X is the ‘Net Revenue Account’. (v) The amount of working capital, being the monthly average or, ½ of stores, materials and supplies including. Preparation of Balance Sheet as Required by Part I, Schedule VI of the Companies Act: 4. (vii) The amounts standing to the credit of the Tariffs and Dividends Control Reserve at the beginning of the year of account. 2,75,000 maturing on 30th June 1998 have been discounted. Final Accounts MCQs test consists of 20 questions, every question must be answered to move to the next question. (viii) The amount carried forward at the beginning of the year of account to the Consumers’ Benefit Reserve. The reserve may be utilised for the following purposes, with the approval of the State Government: (i) Expenses or loss of profits arising out of accidents, or circumstances which management could not have prevented. (2) 2,000 Equity shares are issued for consideration other than cash. Prohibited Content 3. The monetary value associated with an asset acquired is said to be its cost. Trading is maintained by a trading company to find out the gross profit or gross loss as a result of the business activities. (ii) The cost of intangible assets (i.e., underwriting commission, preliminary expenses etc. Valuation of Goodwill and Shares. Trading Account. 3)Balance sheet. ... CA Final New Financial Reporting Strategic Financial Management Corporate and Economic Laws ... Electricity Company Balancesheet & P& L Formats Download Preview. ET Limited are in the midst of finalising their accounts for the year ended 30th September 1999. In accounting, the term cost refers to the expenditure or sacrifice made to acquire something of value. 35:00. Prior to 1948, electricity supply companies charged high rates from the consumers and did not make any reduction on rates. The Company Final Accounts consists of: 1. Image Guidelines 5. 2. (iii) The amounts of any loans borrowed from organisations or institutions approved by the State Government. Trading Account. Profit and Loss Appropriation Account. The cost of service connections must be shown as a fixed asset and the amount so received from the customers for this purpose will be shown in the liabilities side of the Balance Sheet under the head ‘Contributions by customers towards cost of Service Lines’. According to paragraph I of the Sixth Schedule, it is obligatory for all companies to adjust these rates for the sale of electricity by periodical revision in such a way so that their clear profit does not exceed the amount of reasonable return by more than 15% in any year. Plagiarism Prevention 5. It is used to ascertain the gross profit and is prepared by transferring the balances on the sales, purchases and returns accounts to the trading account. (5) The balance of Rs. P5 – Financial Accounting: It consists of different topics under 6 sections which include Generally Accepted Accounting Principles & Accounting Systems, Preparation of Accounts, Control of Accounting Systems, Accounting in Service Sectors, Accounting for Special Transactions, Accounting for Banking, Electricity & Insurance Companies. Content Guidelines 2. The accounts which are prepared at the final stage of the accounting cycle to know the profit or loss and financial position of a business concern are called Final Accounts. It is created out of revenues of each year—a sum not less than ¼% and not more than ½% of the original cost of fixed assets until it … The Double Account System is a method of presenting the annual final accounts/annual financial statements of public utility undertakings, like Railways, Electricity, Gas, Water Supply, Tramways etc. 100 each, fully paid-up. Accounts of Companies 5 company for a period of not less than eight years immediately preceding the relevant financial year. Certain sections of this publication are designed to help you understand and address potential challenges in accounting and reporting related to topics on which the FASB has recently issued (1) proposed guidance or (2) final … Thus the final accounts will consist of a profit and loss account and balance sheet. Under this method, such an amount should be set aside every year throughout the life of the asset, accumulating @ 4% compound interest, which will produce an amount equal to 90% of the original cost of the assets. 100 each. (vi) An amount equal to ½% on the balance of the Development Reserve. Plagiarism Prevention 4. Account Disable 11. This is because the business, instead of trading in goods, supplies services. To Buy Complete Classes Visit - https://www.StudyAtHome.org or Call: 8737012345. Article shared by : ADVERTISEMENTS: In this article we will discuss about the accounts of electricity companies, explained with the help of a suitable illustration. The Board of Directors of Sen & Co. Ltd. consists of two whole-time Directors and three part-time Directors. This document is highly rated by B Com students and has been viewed 3234 times. Kauser Wise 334,490 views. Building @ 2% p.a., Plant and Machinery @ 10% p.a., Furniture @ 10% p.a. According to paragraph VA of the Sixth Schedule, a development reserve is to be created every year—a sum equal to the amount of income-tax on the amount of development rebate to which the licensee is entitled by virtue of Income-tax Act. 3,51,450 as per Sec. 10 1.1 Overview A traditional integrated power entity (utility) generates electricity and sends it around the country or region via high-voltage transmission lines, finally delivering it to Prohibited Content 3. Image Guidelines 4. A balance sheet reflects the financial position of a business for the specific period … The trading and profit and loss account show the profit or loss of the business. Simply put, it is the full and final accounting procedure which is carried out at the end of an accounting year, resulting in the preparation of relevant accounts. The Electricity Companies may also prepare their accounts as per Schedule VI of the Companies Act, 1956, for the purpose of informing their shareholders. Any excess over 20% of reasonable return must be refunded to customers. Final accounts of companies including managerial remuneration, disposal of profits and issue of bonus shares. 45,000 @ 7^%. Profit and Loss Account. final accounts financial accounts prepared at the end of an accounting period. The preparation of Company Final Accounts include the preparation of a set accounts at the end of accounting year/period. 4. (a) full in hand at the end of each month of the year of account. (7) Bills Receivable for Rs. (v) The amounts deposited in Cash with the Company by consumers by way of security. TOS 7. Under this method, an allowance is made in each year in respect of depreciation .of fixed assets—such an amount which is arrived at by dividing 90% of the original cost by the period of its prescribed life. Final Account consists of the following:- 1)Trading account. Balance Sheet Final Accounts – Definition. It is created out of revenues of each year—a sum not less than ¼% and not more than ½% of the original cost of fixed assets until it amounts to 5% of the original cost of fixed assets. Trading account, Profit and Loss account and Balance Sheet together are called final accounts. Calculating the Remuneration Paid to the Directors: 3. (b) 10,000,10% Redeemable Preference Shares of Rs. Every businessman enters into business activities to earn profit. Privacy Policy 8. 8,100 (Rs. 17,40,000 during the year ended 31st March 1997 after charging interest on debentures amounting to Rs. As regards the depreciation method that can be applied, the Act … (3) Debtors of Rs. Sundry Debtors, Bills Receivable, Prepaid Expenses, Accrued Income, Loose Tools, Insurance Claim, Closing Stock, Stock of Stationery, Stock of Postage Stamps, etc. 3,59,550, therefore excess amount Rs. (iii) The original cost of work-in-progress. The preparation of final accounts The trading account The trading account is an account in the ledger and is thus a part of the double-entry system. (ii) Expenses or replacement or removal of plant or works other than expenses requisites for normal maintenance of renewal; (iii) Compensation payable under any law for the time being in force and for which no other provision is made. Disclaimer 9. excluding goodwill). It is also known as Modified Sinking Fund Method. 2. Content Filtration 6. These papers touch upon various topics on accounting. on accounting and reporting concerns specific to renewable energy. The whole-time Directors are entitled to a monthly salary of Rs. 1 Final accounts of Service sector businesses The final accounts of a service sector business – such as a secretarial agency, solicitor, estate agent, doctor – do not normally include a trading account. Final account preparation involves preparing a set of accounts and statements at the end of an accounting year. Prepare a Balance Sheet in vertical form as at 31st December 2000 from the following information of ABC Limited as required under Part IB of Schedule VI of the Companies Act, 1956: (a) 3,000 Equity Shares of Rs. So, the Directors are entitled to have overall maximum remuneration to the extent of Rs. 200. In this you keep track of a company's financial transactions using standard rules, the transactions are recorded, summarized, and presented in a financial report or financial statements such as an income statement or a balance sheet. b) The manual also has the approval of the Executive Director and the full authority of the Board of Trustees. Profit and Loss Account. electricity and gas used in the manufacturing facilities indirect factory supplies, and much more Because manufacturing overhead is an indirect cost, accountants are faced with the task of assigning or allocating overhead costs to each of the units produced. (8) The only liability for taxes is in respect of profit for 1999 for which a provision of 60% on net profit is considered. Final accounts consist of the PROFIT AND LOSS ACCOUNT and the BALANCE SHEET, and may also include a SOURCES AND USES OF FUNDS STATEMENT for the accounting period. is Rs. You should note that when preparing the final accounts of a service sector business – such as a secretarial agency, solicitors, estate agents, doctor – a trading account will not be prepared because, instead of trading in goods, the business supplies services. Preparation of Profit and Loss Account of a Company: The following balance appeared in the books of Regent Company Ltd. as on 31st December 1999: From the above balance and the following information, prepare the Company’s Profit and Loss Account for the year ended 31st Dec. 1999: (2) Outstanding Expenses: Manufacturing Expenses Rs. 3,000. Final accounts show both the financial position of a business along with the profitability, they are used by external and internal parties for various purposes. The preparation of Company Final Accounts include the preparation of a set accounts at the end of accounting year/period. | Accounting, Final Accounts of General Insurance Companies | Accounting, Problems on Final Accounts of the Companies. 7. According to paragraphs III, IV and V of the Sixth Schedule, every electricity company is required to maintain Contingencies Reserve. Depreciation must be provided on all fixed assets. The said rates must neither be enhanced more than once in a year nor be enhanced without giving a proper notice of at least 60 clear days to the State Government or the State Electricity Board. Final Accounts also consists of various adjustments. 1. Trading account of a joint stock of a company is the first main set of account of final accounts. Every electricity supply company is required to submit to the State Government (or to its nominee which is the State Electricity Board) certain statistical statements in the prescribed form according to Rule 26 of the Indian Electricity Rules, 1956. Copyright 10. Only two methods are recognised here for the amount of depreciation on fixed assets, viz., Compound Interest Method and the Straight Line Method. 10,424 (‘000). Pending distribution, if any (this remaining ½) is carried to a ‘Consumers’ Benefit Reserve’. (iv) Compulsory investments made on account of contingencies reserves. A Profit and Loss Account has been prepared in draft. 3. 52,000 are due for more than 6 months. All business transactions are first recorded in a journal. Preparation of Final Accounts of a Company: Calculating the Remuneration Paid to the Directors, Preparation of Profit and Loss Account of a Company, Preparation of Balance Sheet as Required by Part I, Schedule VI of the Companies Act, Preparation of Balance Sheet of a Company as Required under Part IB of Schedule VI of the Companies Act, 1956, Preparation of Final Accounts of a Company. Accounts of Companies 5 company for a period of not less than eight years immediately preceding the relevant financial year. Amount of depreciation so made shall be invested only in the electricity supply company or, in other cases, approval of the State Govt, must be taken. 45,000 and Salaries and Wages Rs. These final tallies are prepared for a specific period. Final accounts show both the financial position of a business along with the profitability, they are used by external and internal parties for various purposes. 2. Profit and Loss Appropriation Account. financial reporting of insurance, banking and electricity companies. of the same shall be charged against Contingency Reserve and, if any discarded assets are sold, Contingency Reserve will be credited. According to paragraph II of the Sixth Schedule, if the amount of clear profit is in excess of the amount of reasonable return to the extent of 20% in any year, such excess shall be applied as under: (i) 1/3rd of such excess, not excluding 5% of the amount of reasonable return, is to be placed at the disposal of the undertaking (as a reward for efficiency). IPCC Students Accounts of Electriciy Company Format in Excel Sheet. (3) Interest accrued on Securities Rs. Depreciation: Every fixed asset must be depreciated; and for the purpose of depreciation, the life of each asset is to be taken as stated in the table given in the Seventh Schedule. (i) The amounts written-off or set aside on account of depreciation of fixed assets and the amounts written-off in respect of intangible assets in the books of the Company. All limited companies must publish their financial statements at the registrar of companies (for public inspection). (b) 1/12 of the sum of cash and bank balances and call and short-term deposits at the end of each month of the year of account not exceeding ¼ th of the operating expenses excluding generation, interest and depreciation. In this article we have compiled top five accounting problems on final accounts of the companies with its relevant solutions. 4,400 (‘000); (iii) Provision to be made for Managing Director’s Commission at 1% of the net profits; Depreciation as per Section 350 of the Companies Act, in Rs. According to paragraphs III, IV and V of the Sixth Schedule, every electricity company is required to maintain Contingencies Reserve. The loan from the State Government is secured by a charge on the land, cash-credits by hypothecation of stocks and book debts and the other secured loans on the building and plant and machinery. Trading Account. These undertakings are usually incorporated under Special Acts and, as a result, the form of accounts is prescribed by, special statute. We have prepared a Multiple Choice Questions (MCQs) test for Final Accounts Chapter for the ease of students to clear their concepts. 3. Managing Director’s commission will be @ 1% on Rs. Explanation. and Motor Vehicles @ 20% p.a. Final accounts are prepared with the following objectives: To determine profit or loss incurred by a … But at the time of submitting their accounts to the Central Government they have to follow the prescribed format framed by the Indian Electricity … This MCQs test will help students to prepare for their objective exams as well as their interviews. 198 of the Companies Act. 700 for out of pocket expenses paid to the auditors. Content Filtrations 6. 1,50,000 which is still incomplete. Balance Sheet. Final accounts are an essential financial component of any accounting year for every company. The Balance Sheet depicts the financial position of the business. IPCC Students Accounts of Electriciy Company Format in Excel Sheet. In addition, they are to get 8% commission and the part-time Directors 1% commission on the profits of the company. You will find perfectly drafted accounting case study samples and examples with accurate solutions.. 4. 166. 3,59,550 – Rs. Final Accounts Training is the ultimate goal in your career as an accountant in the field of Accountancy. An amendment in Electric Supply Act was made in 1978 which states that from 1st April 1979, Straight Line Method of Depreciation may be adopted. Disclaimer 8. It must be remembered that if in any year the clear profit (before considering special appropriations plus balance of Tariff and Dividend Control Reserve) is less than the required amount of Development Reserve, the deficiency so made may not be compensated. ... [Revised Format]Company Final Accounts -kauserwise - Duration: 35:00. Copyright 9. Give note at the foot of the Balance Sheet as may be found necessary: The following additional information is also provided: (1) Miscellaneous expenses included Rs. Another important set of account if as company’s final accounts is the profit and loss account. The final accounts or financial statements consists of: Trading and profit and loss account or income statement, which is prepared to know the profit earned or loss suffered by the business during a specific period. Financial Statement of Electricity Companies. Are you looking for problems and solutions of final accounts of the companies? 7,500 for interest accrued but not due. departmental and branch accounts. 3,000 each. MyAssignmenthelp.com consists of a vast reserve of resource materials that students can explore when they visit our website. You are required to show the disposal of profits assuming bank rate at 6% with the help of the following data: The following balances relate to an electricity company and pertaining to its accounts for the year ended 31st Dec. 1993: From the following information and details relating to the year ended 31st March 2000 and bearing in mind the provisions of the Electricity (Supply) Act, 1948, indicate the disposal of profits of X Electricity Corporation Limited: Before publishing your articles on this site, please read the following pages: 1. In financial accounting, all transactions are recorded in terms of historical cost; that is, the money expended or to be expended at the date of the transaction. The final account consists of the following accounts: Trading and Profit and Loss Account; Balance Sheet; Profit and Loss Appropriation account; Objectives of Final Account preparation. • Prepared by a Certified Public Accounting Firm – Compiled Financial Statement – Reviewed Financial Statement ... • Is a “snapshot in time” –presents the financial picture of the Company as of a specific date ... book value of the company to the owners • Consists of: – Capital Stock or Members’ Capital Thus the final accounts will consist of a profit and loss account and balance sheet. ... CA Final New Financial Reporting Strategic Financial Management Corporate and Economic Laws ... Electricity Company Balancesheet & P& L Formats Download Preview. 2)Profit and Loss account. The account balances, as rounded-off to the nearest thousands, are listed below: The authorised capital is 3,50,000 Equity Shares of Rs. (7) The taxation provision shown in the Trial Balance is after payment of taxes for assessment up to 31st Dec. 1999. 2,000 with Perfect Bank Ltd. which is not a Schedule Bank. Total amount of depreciation must be 90% of the original cost of fixed assets. Uploader Agreement, Read Accounting Notes, Procedures, Problems and Solutions, Learn Accounting: Notes, Procedures, Problems and Solutions, Top 5 Problems on Final Accounts of the Companies, Company Final Accounts: Problems and Solutions | Accounting, How to Prepare Final Accounts of Companies? The following adjustments are yet to be made: (i) Investment Allowance Reserve to be created Rs. They are then transferred to a ledger and balanced. The preparation of a final accounting is the last stage of the accounting cycle. In case of a company incorporated less than eight years before the financial year, the books of accounts for the entire period preceding the financial … Let us make an in-depth study of the eleven schedules in prescribed forms of accounts of electricity supply company. The loan is secured by hypothecation of the Plant and Machinery. 2. However, groupings should form part of the answer. Preparation of Balance Sheet of a Company as Required under Part IB of Schedule VI of the Companies Act, 1956: 5. This account is the first account prepared as a final account, it is prepared to ascertain gross profit or gross loss incurred during an accounting period. This reserve may also be appropriated in annual instalment spread- over within a period of 5 years. Adjustments are those transactions which are taking place after preparation of trial balance. IPCC Students Accounts of Electriciy Company Format in Excel Sheet. In addition, certain entries are Report a Violation, Double Account System: Meaning, Features and Advantages | Electricity Accounts, Preparation of Final Accounts under Electricity Supply Act, 1910, Principles Relating to the Structure of an Organisation | Office Management. Accounting Standards, International Public Sector Accounting Standards and the requirements of the Ghana companies code, 1963 (Act 179). (6) The Directors proposed a dividend @ 20%. (ii) The amounts of any loans advanced by the State Electricity Board. The accounts which are prepared at the final stage of the accounting cycle to know the profit or loss and financial position of a business concern are called Final Accounts. It means capital employed. (ii) Of the balance of excess, ½ shall be transferred to Tariffs and Dividends Control Reserve, and the remaining ½) ½ shall be distributed in shape of proportionate rebate to the consumers on the amounts collected from the sale of energy and meter rental. Before preparing the Balance Sheet, we are to prepare a Profit and Loss Account in order to find out the net profit as under: Before uploading and sharing your knowledge on this site, please read the following pages: 1. Content Guidelines 2. (iv) The amount of any debenture issued by the Company. (6) Balance at Bank includes Rs. The Profit and Loss Account of the company for the year ended 31.12.1999 was as follows: You are asked to compute the remuneration to be paid to the Directors with your comments, if any. The preparation of final accounts The trading account The trading account is an account in the ledger and is thus a part of the double-entry system. 5,000 Audit Fees and Rs. company reporting in an increasing ... accounting issues 1 Financial reporting in the power and utilities industry. Similarly, when any fixed asset ceases to be available for use through obsolescence, inadequacy, superfluity, or for any other reason, it shall be described in the books as discarded asset and, consequently, no further depreciation is allowed (paragraph VII of the Sixth Schedule). According to paragraph VIII of the Sixth Schedule, if an asset has been written-down in the books to 10% or less of its original cost, no further depreciation shall be allowed. You are at the right place! At the same time, they should have taken previous permission from the Central Government for this purpose. They must comply with the Companies Acts which describe the ‘form and content’ of the financial statements. It is used to ascertain the gross profit and is prepared by transferring the balances on the sales, purchases and returns accounts to the trading account. 1,50,000 in the loan account with State Financial Corporation is inclusive of Rs. IPCC Students Accounts of Electriciy Company Format in Excel Sheet. Overview. Since they have taken Rs. Trading Account. 16,585 = Rs. 1. Topics discussed in this video Accounts Of Electricity Company. In case of a company incorporated less than eight years before the financial year, the books of accounts for the entire period preceding the financial …