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10

C H A P T E R

Final Accounts of Companies—

Application of Schedule III, Part I of the

Companies Act, 2013

MEANING OF KEY TERMS USED IN THE CHAPTER

BALANCE SHEET
Equity and Liabilities
1. Shareholders’ Funds
Shareholders’ Funds are the funds of the shareholders of the company. It comprises of: Share
Capital, Reserves and Surplus and Money Received against Share Warrants.
(a) Share Capital
It is the amount received by the company as capital. It includes both Equity Share Capital and
Preference Share Capital.
(b) Reserves and Surplus
It is the amount set aside out of Surplus (profit) or received as Securities Premium Reserve. It
may be free reserve or committed reserve.
(c) Money Received against Share Warrants
It is the amount received against Share Warrants. Share Warrant is a financial instrument which
gives the holder the right to acquire Equity Shares specified therein at a specified date at a
specified price.
2. Share Application Money Pending Allotment
It is the amount received as share application and against which the company will make allotment.
3. Non-Current Liabilities
Non-Current Liabilities are defined in Schedule III of the Companies Act, 2013 as those liabilities which
are not Current Liabilities. These are sub-classified into: Long-term Borrowings; Deferred Tax
Liabilities (Net); Other Long-term Liabilities and Long-term Provisions.
(a) Long-term Borrowings
Long-term Borrowings are the borrowings which as on the date of borrowings, are repayable after
more than 12 months from the date of Balance Sheet or after the period of Operating Cycle.
(b) Deferred Tax Liabilities (Net)
It is the amount of tax on the temporary difference between the accounting income and taxable
income. It is only a book entry and not an actual liability. It arises when accounting income is
more than the taxable income.
(c) Other Long-term Liabilities
These are the liabilities, other than Long-term Borrowings of the company.