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 … (5) The balance of Rs. This reserve may also be appropriated in annual instalment spread- over within a period of 5 years. IPCC Students Accounts of Electriciy Company Format in Excel Sheet. Image Guidelines 4. (vi) An amount equal to ½% on the balance of the Development Reserve. Privacy Policy 8. IPCC Students Accounts of Electriciy Company Format in Excel Sheet. (vii) The amounts standing to the credit of the Tariffs and Dividends Control Reserve at the beginning of the year of account. 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. Trading Account. 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. Any excess over 20% of reasonable return must be refunded to customers. (v) The amount of working capital, being the monthly average or, ½ of stores, materials and supplies including. 700 for out of pocket expenses paid to the auditors. 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. 3,51,450 as per Sec. Another important set of account if as company’s final accounts is the profit and loss account. 35:00. Every businessman enters into business activities to earn profit. Chapters 8 and 9 are devoted to accounting for special transactions i.e. Final Accounts as per Double Account System which included Revenue A/c, Net Revenue A/c, Receipt & … company reporting in an increasing ... accounting issues 1 Financial reporting in the power and utilities industry. 1,50,000 in the loan account with State Financial Corporation is inclusive of Rs. (IPCC Gr-II) Important Changes: The earlier syllabus (study material of ICAI) included the following, in this chapter: 1. Final Accounts Training is the ultimate goal in your career as an accountant in the field of Accountancy. 10,424 (‘000). Interest on accumulated balance will, however, be allowed as an expense from revenue. To Buy Complete Classes Visit - https://www.StudyAtHome.org or Call: 8737012345. Final Accounts MCQs test consists of 20 questions, every question must be answered to move to the next question. The preparation of Company Final Accounts include the preparation of a set accounts at the end of accounting year/period. (7) Bills Receivable for Rs. “Final accounts consist of trading account, profit and loss account and balance sheet. In accounting, the term cost refers to the expenditure or sacrifice made to acquire something of value. 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. Are you looking for problems and solutions of final accounts of the companies? 1,50,000 which is still incomplete. 1. (b) 10,000,10% Redeemable Preference Shares of Rs. b) The manual also has the approval of the Executive Director and the full authority of the Board of Trustees. Final Account consists of the following:- 1)Trading account. (ii) The cost of intangible assets (i.e., underwriting commission, preliminary expenses etc. Trading account, Profit and Loss account and Balance Sheet together are called final accounts. Copyright 10. (7) The taxation provision shown in the Trial Balance is after payment of taxes for assessment up to 31st Dec. 1999. 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. Balance sheet, which is prepared to know the financial … excluding goodwill). (6) Balance at Bank includes Rs. Valuation of Goodwill and Shares. Content Filtration 6. Preparation of Balance Sheet as Required by Part I, Schedule VI of the Companies Act: 4. (2) 2,000 Equity shares are issued for consideration other than cash. 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. It means capital employed. Balance Sheet Final accounts are an essential financial component of any accounting year for every company. and Motor Vehicles @ 20% p.a. These undertakings are usually incorporated under Special Acts and, as a result, the form of accounts is prescribed by, special statute. You will find perfectly drafted accounting case study samples and examples with accurate solutions.. The loan is secured by hypothecation of the Plant and Machinery. This document is highly rated by B Com students and has been viewed 3234 times. But at the time of submitting their accounts to the Central Government they have to follow the prescribed format framed by the Indian Electricity … Trading account of a joint stock of a company is the first main set of account of final accounts. Overview. 198 of the Companies Act. This is because the business, instead of trading in goods, supplies services. 16,585 = Rs. 45,000 @ 7^%. Prohibited Content 3. • 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 Financial Statement of Electricity Companies. Trading is maintained by a trading company to find out the gross profit or gross loss as a result of the business activities. 3,000 each. 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. 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. 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. Trading Account. 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 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. 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. 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. 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. In addition, certain entries are Final Accounts – Definition. Trading Account. According to paragraphs III, IV and V of the Sixth Schedule, every electricity company is required to maintain Contingencies Reserve. (4) Schedules need not be given. 200. 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. 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. ... [Revised Format]Company Final Accounts -kauserwise - Duration: 35:00. 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. Dec 23, 2020 - Accounts of Electricity Companies - Electricity Companies, Advanced Corporate Accounting B Com Notes | EduRev is made by best teachers of B Com. 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’. Disclaimer 9. Kauser Wise 334,490 views. (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. 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. 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. Accounts of Companies 5 company for a period of not less than eight years immediately preceding the relevant financial year. 52,000 are due for more than 6 months. 100 each. 17,40,000 during the year ended 31st March 1997 after charging interest on debentures amounting to Rs. 7. 4. (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. Topics discussed in this video Accounts Of Electricity Company. 100 each, fully paid-up. of the same shall be charged against Contingency Reserve and, if any discarded assets are sold, Contingency Reserve will be credited. Final accounts of companies including managerial remuneration, disposal of profits and issue of bonus shares. Copyright 9. These final tallies are prepared for a specific period. Let us make an in-depth study of the eleven schedules in prescribed forms of accounts of electricity supply company. Building @ 2% p.a., Plant and Machinery @ 10% p.a., Furniture @ 10% p.a. All business transactions are first recorded in a journal. 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. (iii) The amounts of any loans borrowed from organisations or institutions approved by the State Government. 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. 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. They must comply with the Companies Acts which describe the ‘form and content’ of the financial statements. Only two methods are recognised here for the amount of depreciation on fixed assets, viz., Compound Interest Method and the Straight Line Method. 2,000 with Perfect Bank Ltd. which is not a Schedule Bank. 1. Prior to 1948, electricity supply companies charged high rates from the consumers and did not make any reduction on rates. 3)Balance sheet. The Company Final Accounts consists of: 1. 100 each, fully paid-up. 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). (b) Prepare the Balance Sheet of the company, based on all the above. 3,51,450) must be refunded to the company u/s 309 (5A). 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’. Trading Account. 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. Trading account, Profit and Loss account and Balance Sheet together are called final accounts. 3. ... CA Final New Financial Reporting Strategic Financial Management Corporate and Economic Laws ... Electricity Company Balancesheet & P& L Formats Download Preview. At the same time, they should have taken previous permission from the Central Government for this purpose. 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. However, groupings should form part of the answer. 2)Profit and Loss account. 2. Balance Sheet. 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. (vi) The amounts standing to the credit of the Development Reserve at the close of the year of account. 7,500 for interest accrued but not due. Saharanpur Electricity Ltd. earned a profit of Rs. 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. In addition, certain entries are Since they have taken Rs. financial reporting of insurance, banking and electricity companies. Account Disable 11. 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. Plagiarism Prevention 4. Managing Director’s commission will be @ 1% on Rs. 3,59,550 – Rs. The following adjustments are yet to be made: (i) Investment Allowance Reserve to be created Rs. 3,59,550, therefore excess amount Rs. Objectives of Final Accounts 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. The most important and crucial function of financial accounting is to ascertain the financial position and the profitability of the business. (6) The Directors proposed a dividend @ 20%. 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. IPCC Students Accounts of Electriciy Company Format in Excel Sheet. Report a Violation 10. (iii) The original cost of work-in-progress. Disclaimer 8. 166. 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 … 3,000. IPCC Students Accounts of Electriciy Company Format in Excel Sheet. Total amount of depreciation must be 90% of the original cost of fixed assets. 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. Terms of Service 7. Content Guidelines 2. 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. The monetary value associated with an asset acquired is said to be its cost. Content Filtrations 6. 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. Final accounts gives an idea about the profitability and financial position of a business to its management, owners, and other interested parties. (viii) The amount carried forward at the beginning of the year of account to the Consumers’ Benefit Reserve. is Rs. 3. 5,000 Audit Fees and Rs. The preparation of a final accounting is the last stage of the accounting cycle. The preparation of Company Final Accounts include the preparation of a set accounts at the end of accounting year/period. (a) full in hand at the end of each month of the year of account. | Accounting, Final Accounts of General Insurance Companies | Accounting, Problems on Final Accounts of the Companies. Accounting Standards, International Public Sector Accounting Standards and the requirements of the Ghana companies code, 1963 (Act 179). on accounting and reporting concerns specific to renewable energy. The whole-time Directors are entitled to a monthly salary of Rs. Company financial statements consist of: Income statement (profit and loss account) Statement of changes in equity These papers touch upon various topics on accounting. Preparation of Balance Sheet of a Company as Required under Part IB of Schedule VI of the Companies Act, 1956: 5. Final account preparation involves preparing a set of accounts and statements at the end of an accounting year. It is also known as Modified Sinking Fund Method. It determines the financial … The account balances, as rounded-off to the nearest thousands, are listed below: The authorised capital is 3,50,000 Equity Shares of Rs. A balance sheet reflects the financial position of a business for the specific period … 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. The Company Final Accounts consists of: 1. ET Limited are in the midst of finalising their accounts for the year ended 30th September 1999. 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. 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. 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. (ii) The amounts of any loans advanced by the State Electricity Board. Calculating the Remuneration Paid to the Directors: 3. 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. TOS 7. 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. Explanation. 5,400 (‘000); (ii) Provision to be made for Income-tax in Rs. 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. 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. (iv) Compulsory investments made on account of contingencies reserves. Preparation of Profit and Loss Account of a Company: The following balance appeared in the books … 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. 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. As regards the depreciation method that can be applied, the Act … All limited companies must publish their financial statements at the registrar of companies (for public inspection). Pending distribution, if any (this remaining ½) is carried to a ‘Consumers’ Benefit Reserve’. 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. 2. You are at the right place! 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 It is the difference between the total expenditure (including special appropriation). According to paragraphs III, IV and V of the Sixth Schedule, every electricity company is required to maintain Contingencies Reserve. So, the Directors are entitled to have overall maximum remuneration to the extent of Rs. (3) Interest accrued on Securities Rs. Content Guidelines 2. The Balance Sheet depicts the financial position of the business. The Board of Directors of Sen & Co. Ltd. consists of two whole-time Directors and three part-time Directors. 2,75,000 maturing on 30th June 1998 have been discounted. 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). (v) The amounts deposited in Cash with the Company by consumers by way of security. Accounts of Companies 5 company for a period of not less than eight years immediately preceding the relevant financial year. Failure … Profit and Loss Account. They are then transferred to a ledger and balanced. 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. MyAssignmenthelp.com consists of a vast reserve of resource materials that students can explore when they visit our website. 2. 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. (8) The company had a contract for the erection Of machinery at Rs. ... CA Final New Financial Reporting Strategic Financial Management Corporate and Economic Laws ... Electricity Company Balancesheet & P& L Formats Download Preview. 4. (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. 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 … Profit and Loss Account. When any fixed asset is discarded due to obsolescence or any other reason, the w.d.v. Final accounts are prepared with the following objectives: To determine profit or loss incurred by a … Prohibited Content 3. Profit and Loss Appropriation Account. departmental and branch accounts. 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. Depreciation must be provided on all fixed assets. Profit and Loss Appropriation Account. 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. This MCQs test will help students to prepare for their objective exams as well as their interviews. 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? Final Accounts also consists of various adjustments. 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. Sundry Debtors, Bills Receivable, Prepaid Expenses, Accrued Income, Loose Tools, Insurance Claim, Closing Stock, Stock of Stationery, Stock of Postage Stamps, etc. (3) Debtors of Rs. 45,000 and Salaries and Wages Rs. Article shared by : ADVERTISEMENTS: In this article we will discuss about the accounts of electricity companies, explained with the help of a suitable illustration. Adjustments are those transactions which are taking place after preparation of trial balance. (a) Show the computation of commission to the Managing Directors, and. (8) The only liability for taxes is in respect of profit for 1999 for which a provision of 60% on net profit is considered. 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. Thus the final accounts will consist of a profit and loss account and balance sheet. 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'. (iv) The amount of any debenture issued by the Company. In addition, they are to get 8% commission and the part-time Directors 1% commission on the profits of the company. The Electricity Companies may also prepare their accounts as per Schedule VI of the Companies Act, 1956, for the purpose of informing their shareholders. 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. In this article we have compiled top five accounting problems on final accounts of the companies with its relevant solutions.