Schedule III: the Shape of It
Chapter Forty-Five
Syllabus topic 4, "Schedule III of the Companies Act, 2013"
Pages 138 to 141 of 168
In one line
Schedule III prescribes the form in which a company's balance sheet and statement of profit and loss are presented, and the general instructions that govern both.
Where it comes from
Schedule III is headed "See section 129". That is the whole of its authority. Section 129(1) requires the financial statements to be in the form or forms provided for different classes of companies in Schedule III, and the Schedule provides them.
So the chain runs:
| Provision | What it supplies | |
|---|---|---|
| 1 | Section 2(40) | What a financial statement consists of |
| 2 | Section 129(1) | That it must be true and fair, standards-compliant, and in the Schedule III form |
| 3 | Section 133 | Which accounting standards apply |
| 4 | Schedule III | The form itself |
Say that chain in an answer before you draw a format. It shows the examiner you know why the format is compulsory.
The three divisions
| Division | For | Heading in the Schedule |
|---|---|---|
| Division I | A company whose financial statements are required to comply with the Companies (Accounting Standards) Rules 2006 | Financial statements for a company whose financial statements are required to comply with the Companies (Accounting Standards) Rules, 2006 |
| Division II | A company whose statements are drawn up in compliance with the Companies (Indian Accounting Standards) Rules 2015 | Financial statements for a company drawn up in compliance of the Ind AS Rules |
| Division III | A non-banking financial company on Indian Accounting Standards | Financial statements for an NBFC drawn up in compliance of the Ind AS Rules |
Two visible differences between Division I and Division II, worth one mark if the examiner asks:
- Division I puts EQUITY AND LIABILITIES first and ASSETS second. Division II puts ASSETS first.
- Division I says "Property, Plant and Equipment and Intangible assets"; Division II opens the asset side with Property, Plant and Equipment, capital work-in-progress, investment property, goodwill and financial assets as separate heads.
Everything in this module is Division I. Your syllabus names Part I and Part II of Schedule III, and MU's problems are set on the Division I formats.
The two parts
| Part | What it prescribes |
|---|---|
| Part I | The Balance Sheet |
| Part II | The Statement of Profit and Loss |
Each part has its own set of general instructions following the format, and the Schedule opens with general instructions governing both. Those opening instructions are the subject of the rest of this chapter.
The general instructions, one by one
Instruction 1: the Act and the standards override the Schedule.
Where compliance with the requirements of the Act including Accounting Standards requires any change in treatment or disclosure, including addition, amendment, substitution or deletion in the head or sub-head, or any changes inter se in the financial statements, the same shall be made and the requirements of this Schedule shall stand modified accordingly.
The rest of this chapter
Module one is free. The rest of this chapter comes with the B.Com. (Accountancy) Semester 3 notes.
You are reading a chapter from a later module. Everything in module one of every subject stays free, and so does the syllabus.
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Free either way: the syllabus, and module one of every subject.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.