Page 10 - afs12
P. 10

1

                                                                            C H A P T E R



                     Financial Statements of a Company



                                MEANING OF KEY TERMS USED IN THIS CHAPTER


                     BALANCE SHEET
                     EQUITY AND LIABILITIES
                       1.  Shareholders’ Funds       Shareholders’ Funds are the funds that are of the shareholders
                                                     of the company. They consist of Share Capital (both Equity and
                                                     Preference Shares), 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:
                            Reserves                 It is the amount set aside out of Surplus, i.e., Balance in Statement
                                                     of Profit & Loss or amount received as Securities Premium. A reserve
                                                     may be free reserve or committed reserve.
                            Surplus                  It is the amount of accumulated profit which may be appropriated
                                                     towards reserve or for payment of dividend.
                        (c)  Money Received against   It is the amount received against Share  Warrants. Share
                           Share Warrants            Warrants are the financial instruments which give the holder right
                                                     to receive Equity Shares in the company on a specified date and
                                                     at a specified rate.
                       2.  Share Application Money   It is the amount received as share application and against
                        Pending Allotment            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 borrowing are repayable after more than 12 months
                                                     or after the period of Operating Cycle from the date of
                                                     Balance Sheet.
                        (b)  Deferred Tax Liabilities   It is the amount of tax on the temporary difference between
                           (Net)                     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. It is determined for each difference
                                                     in accounting and taxable income and totalled and shown in the
                                                     Balance Sheet at net amount.
                        (c)  Other Long-term Liabilities   They are the Long-term Liabilities other than Long-term Borrowings
                                                     of the company.
                        (d)  Long-term Provisions    These are the provisions for estimated liabilities that will be payable
                                                     after 12 months or after the period of Operating Cycle from the
                                                     date of Balance Sheet.
   5   6   7   8   9   10   11   12   13   14   15