How To Prepare Accounts for Pvt Ltd Company
Every year, at the AGM (Annual General Meeting) of the Company , the Board of Directors of the Company shall lay before the Company
1. Balance Sheet of the Company at the end of the Financial year
2. Profit & Loss Account for the period
Profit & Loss Account
Profit & Loss Account reflect the amount of Profit or loss a Company has incurred during the particular Financial Year.Its reflect how the revenue is transformed into Net Income or Loss . It takes into consider all income ( nor Profit ) generated through Sales or Services and Outflow through purchases or Services Undertaken. Further it also taken into account all Operating as well as non operating cost.
Income statements should help investors and creditors determine the past financial performance of the enterprise, predict future performance, and assess the capability of generating future cash flows through report of the income and expenses.
However, information of an income statement has several limitations:
- Items that might be relevant but cannot be reliably measured are not reported (e.g., brand recognition and loyalty).
- Some numbers depend on accounting methods used (e.g., using FIFO or LIFO accounting to measure inventory level).
- Some numbers depend on judgments and estimates.
Its a summary of Financial Statement for a particular period. A balance sheet is often described as a “snapshot of a company’s financial condition. It’s called a balance sheet because the two sides balance out. This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders’ equity).
The balance sheet must follow the following formula:
Assets = Liabilities + Shareholders’ Equity