Advanced Accounting · Financial Statements of Companies

Company Final Accounts Format under Schedule III for CA Inter

Updated 5 October 2026 · Fact-checked

Schedule III to the Companies Act, 2013 prescribes how companies present the Balance Sheet and Statement of Profit and Loss. Division I applies to companies following Accounting Standards. To solve questions, classify each item into the correct head, test current versus non-current, then present in vertical format with note numbers and figures.

Understand Company Final Accounts Format under Schedule III

Schedule III is the presentation rulebook for company financial statements. A company cannot design its own layout. It must follow the prescribed heads, order and disclosures. Division I applies to companies whose financial statements follow Accounting Standards (AS). Division II applies to Ind AS companies, and Division III to Ind AS NBFCs.

The Balance Sheet is in vertical format. It has two main parts: Equity and Liabilities, and Assets. Equity and Liabilities has Shareholders' funds, Share application money pending allotment, Non-current liabilities and Current liabilities. Shareholders' funds comprise Share capital, Reserves and surplus, and Money received against share warrants. Assets has Non-current assets and Current assets.

The Statement of Profit and Loss also follows a fixed order:

Revenue from operations
Other income
Total revenue
Expenses
Total expenses
Profit before exceptional and extraordinary items and tax
Exceptional items
Profit before extraordinary items and tax
Extraordinary items
Profit before tax
Tax expense (current tax and deferred tax)
Profit (loss) for the period from continuing operations (after tax expense on continuing operations)
Profit (loss) from discontinuing operations
Tax expense of discontinuing operations
Profit (loss) from discontinuing operations (after tax)
Profit (loss) for the period
Earnings per share

The most tested idea is current versus non-current. An asset is current if it is expected to be realised in, or held for sale or consumption in, the normal operating cycle. It is also current if it is held mainly for trading, expected to be realised within 12 months after the reporting date, or is cash or a cash equivalent, unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date. All other assets are non-current. Liabilities follow the mirror logic: settled in the operating cycle, held for trading, due within 12 months, or no unconditional right to defer settlement for 12 months.

The general instructions also matter. Items are shown with note numbers, figures are rounded off as per the total turnover of the company (for turnover less than ₹100 crore, to the nearest hundreds, thousands, lakhs or millions, or decimal thereof; for turnover of ₹100 crore or more, to the nearest lakhs, millions or crores, or decimal thereof), and previous year figures are given. Notes to accounts give the detail behind each head. Many exam marks come from putting the right item under the right head and sub-head.

Key rules to remember

Balance Sheet identity: Equity and Liabilities total = Total Assets; Use this to check your final answer. A mismatch means a misclassified or missed item.
Shareholders' funds: Share capital + Reserves and surplus + Money received against share warrants; Share application money pending allotment is shown separately after Shareholders' funds.
Current asset test: Realised or consumed in operating cycle, OR held for trading, OR realisable within 12 months after the reporting date, OR cash/cash equivalent (unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date); If none applies, the asset is non-current.
Current liability test: Settled in operating cycle, OR held for trading, OR due within 12 months, OR no unconditional right to defer settlement for 12 months; Otherwise non-current. Current maturities of long-term debt are shown under current liabilities.
Operating cycle: Time between acquiring assets for processing and their realisation in cash or cash equivalents; If it cannot be identified, assume 12 months.
Profit before tax: PBT = Total revenue − Total expenses ± Exceptional items ± Extraordinary items (gains added, losses deducted); Reach PBT in stages. Total revenue − Total expenses gives Profit before exceptional and extraordinary items and tax. Adjust for exceptional items to get Profit before extraordinary items and tax. Then adjust for extraordinary items to get Profit before tax. Exceptional items come before extraordinary items in the statement, and the intermediate profit figures are not the final PBT. Exceptional and extraordinary items can be gains or losses, so add a gain and deduct a loss. Tax expense, current and deferred, is deducted after PBT.
Reserves and surplus heads: Capital reserves; Capital redemption reserve; Securities premium; Debenture redemption reserve; Revaluation reserve; Share options outstanding; Other reserves; Surplus (balance in P&L); A debit balance in surplus is shown as a negative figure.

How to solve Company Final Accounts Format under Schedule III questions

Use this order for any question that asks you to prepare or correct a Balance Sheet or Statement of Profit and Loss under Schedule III.

1Read the trial balance and adjustments. Tick each item as you place it, so none is missed.
2Separate items into Balance Sheet items and Statement of Profit and Loss items.
3Apply adjustments first: outstanding and prepaid items, depreciation, provisions, tax, and dividend. Dividend proposed or declared after the Balance Sheet date is not recognised as a liability and is disclosed in the notes (AS 4 revised). Dividend declared on or before the Balance Sheet date is a liability.
4Place each Balance Sheet item under the correct main head and sub-head: Shareholders' funds, Non-current liabilities, Current liabilities, Non-current assets, Current assets.
5Apply the current versus non-current test using the operating cycle and the 12-month rule.
6Prepare the Statement of Profit and Loss in the prescribed order, then carry profit to Reserves and surplus.
7Add note numbers and show working notes for share capital, reserves and fixed assets.
8Check that both sides of the Balance Sheet agree.

Quickest way: Head-by-head tick method

When to use it: Use this when a long trial balance or a classification-based MCQ must be solved in limited time.

For MCQs, ask first: is the item an asset or liability, then is it due or realisable within 12 months or the operating cycle. This eliminates most options.
Remember frequent traps: current maturities of long-term borrowings are current, and advance tax paid is shown under Short-term loans and advances, or set off against the provision for tax where permitted.
For written answers, draw the skeleton format first with all main heads and sub-heads and fill the figures in as you go.
Write note numbers and a short working note for each grouped figure. Step marks are given for correct classification even if one figure is wrong.
Total both sides before finishing. If they differ, recheck adjustments rather than forcing the figure.

Common mistakes in Company Final Accounts Format under Schedule III

Showing proposed dividend as a current liability by default.
Older practice treated it as a liability at year end.
Fix: Under AS 4 (revised), dividend proposed or declared after the Balance Sheet date is not recognised as a liability and is disclosed in the notes. Only dividend declared on or before the Balance Sheet date is a liability.
Classifying all long-term borrowings as non-current.
Students look only at the original loan term.
Fix: Show the instalment due within 12 months as 'current maturities of long-term debt' under other current liabilities.
Writing the Balance Sheet in the old horizontal style.
Habit from earlier years and other papers.
Fix: Always use the vertical Schedule III format with Equity and Liabilities first, then Assets.
Putting securities premium or reserves under Share capital.
Both relate to owners' funds, so they look alike.
Fix: Share capital shows only capital. Securities premium, general reserve and surplus go under Reserves and surplus.
Treating investments as current by default.
Students assume liquid means current.
Fix: Investments are non-current unless held for trading or realisable within 12 months. Classify using intention and the period given.
Leaving out the tax expense line or placing extraordinary items wrongly.
Students rush the Statement of Profit and Loss and ignore the prescribed order.
Fix: Follow the fixed sequence: expenses, profit before exceptional and extraordinary items and tax, exceptional items, profit before extraordinary items and tax, extraordinary items, profit before tax, then tax expense.

Worked examples

Example 1

Classify the following as current or non-current in a company's Balance Sheet, and name the head: (a) Debentures of ₹10,00,000 repayable after 4 years; (b) Instalment of ₹2,00,000 on a term loan due within 6 months; (c) Trade receivables due in 60 days; (d) Land held for use in the business.

Show the solution

(a) The debentures are not due within 12 months and are not held for trading. They are non-current and shown under Non-current liabilities: Long-term borrowings.
(b) The instalment is due within 12 months. It is current and shown under Current liabilities: Other current liabilities, as current maturities of long-term debt.
(c) The receivables will be realised within the operating cycle and within 12 months. They are current and shown under Current assets: Trade receivables.
(d) Land held for business use is not for sale or realisation in the cycle. It is non-current and shown under Non-current assets: Property, Plant and Equipment.

Answer: (a) Non-current liability, long-term borrowings. (b) Current liability, other current liabilities. (c) Current asset, trade receivables. (d) Non-current asset, property, plant and equipment.

Example 2

From the following balances of Arya Ltd. as on 31 March 2027, prepare the Equity and Liabilities side of the Balance Sheet in Schedule III format: Equity share capital ₹20,00,000; Securities premium ₹3,00,000; General reserve ₹4,00,000; Surplus in Statement of Profit and Loss ₹2,50,000; 9% Debentures (repayable 2030) ₹8,00,000; Trade payables ₹3,50,000; Outstanding expenses ₹50,000; Provision for tax ₹1,20,000.

Show the solution

Shareholders' funds: Share capital ₹20,00,000. Reserves and surplus: Securities premium ₹3,00,000 + General reserve ₹4,00,000 + Surplus ₹2,50,000 = ₹9,50,000.
Total Shareholders' funds = ₹20,00,000 + ₹9,50,000 = ₹29,50,000.
Non-current liabilities: Long-term borrowings, 9% Debentures ₹8,00,000, as repayment is in 2030.
Current liabilities: Trade payables ₹3,50,000. Other current liabilities: outstanding expenses ₹50,000. Short-term provisions: provision for tax ₹1,20,000 (no advance tax is given here, so no set-off arises). Total = ₹3,50,000 + ₹50,000 + ₹1,20,000 = ₹5,20,000.
Total Equity and Liabilities = ₹29,50,000 + ₹8,00,000 + ₹5,20,000 = ₹42,70,000.

Answer: Shareholders' funds ₹29,50,000; Non-current liabilities ₹8,00,000; Current liabilities ₹5,20,000; Total ₹42,70,000.

Exam tips

Practise drawing the full Schedule III skeleton from memory. A clean skeleton secures format marks quickly.
In MCQs, look for the 12-month and operating cycle clues in the wording. They decide current versus non-current.
Always write the sub-head, such as Long-term borrowings or Short-term provisions, not just the main head.
Read adjustments carefully for dividend, tax and depreciation. They change the classification and the figures.
State any assumption, such as a 12-month operating cycle, in one line so you earn the marks.

Practice questions from Financial Statements of Companies

Company Final Accounts Format under Schedule III in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Company Final Accounts Format under Schedule III: frequently asked questions

Which companies follow Division I of Schedule III?

Division I applies to companies whose financial statements are prepared under Accounting Standards. Companies required to follow Ind AS use Division II. CA Intermediate Advanced Accounting mainly tests Division I.

How do I decide if an item is current or non-current?

Apply the tests for operating cycle, held for trading, 12 months after the reporting date, and cash restrictions. If none of the tests for current applies, the item is non-current. Use the mirror tests for liabilities.

What is the operating cycle under Schedule III?

It is the time between acquiring assets for processing and realising them in cash or cash equivalents. If the cycle cannot be identified, assume it is 12 months.

Is the Balance Sheet in horizontal or vertical format?

Schedule III prescribes the vertical format for companies. Equity and Liabilities come first, followed by Assets, with note numbers against each head.