Formats of Income Statement and Balance Sheet Essay

Income affirmation In the case of sole proprietary and partnership concerns there be no incontrovertible forms of the income statement and balance sheet. Their preparation is also desirable provided not compulsory. However, they atomic number 18 generally prepargond. In the case of trading concern, a trading paper and in the case of a manufacturing concern, a manufacturing pecker and a trading key can also be prepared. In such a case, the account heading is mentioned as follows Manufacturing/trading and turn a lucre and injustice account.In the case of joint stock companies preparation of the dinero and press release account and balance sheet each year is compulsory. in that respect is no prescribed form ( yet in the case of banking and insurance companies) of the income statement or salary and loss account. The account is titled as benefit and loss account The results of manufacturing and trading activities may however, be shown separately in the account. The ampl ification and loss account is usually prepared in a T shape. In the case of joint stock company, the manufacturing, trading and shekels and loss account is prepared in the above format except with three modificationsI.The heading given is only Profit and loss account for taxation in the profit and loss account II.The net profit is shown after making provisions for taxation in the profit and loss account III.Figures, for the previous period, if any, have also to be given. Profit and loss appropriation account In the case of joint stock companies, a profit and loss appropriation account is also prepared. It explains as to how the profit earned during the period has been distributed. Balance sheet There is no prescribed form of balance sheet for a sole proprietary or a partnership concern. However, the assets and liabilities may be shown in any of the following(a) ordersI.Liquidity orderII.Permanency Order In case the concern adopts liquidity order, the assets which are more readily convertible into cash are taken into account initially and those which are not so readily convertible are taken into account subsequently. Similarly those liabilities which are payable first are taken into account initially and those payable later on are taken into account subsequently and so on. In the case of permanence order, the reverse order is followed. As per the law applicable to some governments, every balance sheet of a company shall give a authorized and fair view of the state of affairs of the company as at the end of the financial year. Similarly, every profit and loss account of a company shall give a true and fair view of the profit or loss account of the company for the financial year.