Corporate Accounting and Auditing · Statement of Profit and Loss and Balance Sheet (Schedule III of Companies Act, 2013)

Schedule III Overview and General Instructions for CMA Inter

Updated 10 October 2026 · Fact-checked

Schedule III of the Companies Act, 2013 sets the form of a company's balance sheet and statement of profit and loss under section 129. Division I applies to companies following Accounting Standards, Division II to Ind AS companies, and Division III to NBFCs that follow Ind AS. Solve questions by choosing the division, then applying the presentation, rounding and comparative rules.

Understand Schedule III Overview and General Instructions

Section 129(1) says financial statements must give a true and fair view, comply with the accounting standards notified under section 133, and be in the form provided for different classes of companies in Schedule III. So Schedule III is the template. The accounting standards decide how an item is measured. Schedule III decides where it is shown and what is disclosed.

The section also carries limits. Its first-level rules do not apply to insurance companies, banking companies, or companies generating or supplying electricity, nor to any class of company for which another Act specifies a form. Those companies follow their own formats. That is why banks, insurers and electricity companies have separate chapters in your syllabus.

Schedule III has three divisions. Division I is for companies whose financial statements are prepared under the Accounting Standards (AS). Division II is for companies that must follow Indian Accounting Standards (Ind AS). Division III is for non-banking financial companies that follow Ind AS. Before you answer any question, check which one it asks for. Division I and II look similar, but Division II presents items such as other comprehensive income and a statement of changes in equity.

The general instructions then govern how you present the statements. The ones you use most are these: every item needs a note cross-reference, comparative figures for the previous year are shown, and amounts are rounded off according to the company's total income or turnover. Rounding off is a presentation rule, not a recalculation. You still compute exactly and round only the figures you show.

Two more points matter. First, notes to accounts form part of the financial statements. The Explanation to section 129 says a reference to the financial statement includes notes annexed to or forming part of it. Second, if a company departs from the accounting standards, section 129(5) requires it to disclose the deviation, the reasons and the financial effects, if any.

Key rules to remember

Legal basis of the format: Section 129(1): true and fair view + compliance with standards under section 133 + form per Schedule III; Cite section 129(1) when asked why Schedule III applies to a company.
Which division applies: Division I = AS companies; Division II = Ind AS companies; Division III = NBFCs following Ind AS; Read the question for the words 'Ind AS' or 'NBFC' before choosing the format.
Exclusions from section 129(1): Insurance, banking and electricity generation or supply companies, and classes with a form specified under their own Act, are outside Schedule III; These follow their governing Act's format.
Consolidation: Company with one or more subsidiaries: prepare consolidated financial statements in the same form and manner as its own (section 129(3)); Also attach a statement of salient features of subsidiaries' statements.
Laying before the AGM: Board lays financial statements before the AGM for the financial year (section 129(2)); Consolidated statements are laid along with the standalone ones.
Deviation from standards: Disclose: deviation + reasons + financial effects, if any (section 129(5)); All three must be stated.
Penalty for contravention: Imprisonment up to 1 year, or fine of ₹50,000 to ₹5,00,000, or both (section 129(7)); Applies to the MD, whole-time director in charge of finance, CFO or other person charged by the Board; if none, all directors.
Rounding off: Round off according to the scale the general instructions of Schedule III prescribe for the company's total income or turnover; use the same scale throughout; Check the thresholds and permitted units in your ICMAI study material. Round presented figures only, never the working.

How to solve Schedule III Overview and General Instructions questions

Use this method for any question on applicability, divisions or general instructions.

1Read the question and note the type of company: AS company, Ind AS company, NBFC, bank, insurer or electricity company.
2Pick the right framework: Division I, II or III, or the company's own Act where section 129(1) excludes it.
3State the legal basis in one line, citing section 129(1) and section 133 for the standards.
4Apply the general instructions the question tests: note references, comparative figures, rounding off, and uniform units.
5If the question gives figures, compute exactly first and round only when presenting, using one scale throughout.
6Check for deviations from standards and for subsidiaries. Mention section 129(5) and section 129(3) where relevant.
7Close with a one-line conclusion, for example 'Division II format applies, so show OCI and the statement of changes in equity.'

Quickest way: Division-first shortcut

When to use it: For MCQs and short theory questions that ask which format or rule applies.

Look for keywords: 'Ind AS' means Division II, 'NBFC' with Ind AS means Division III, otherwise Division I.
Look for 'bank', 'insurance' or 'electricity'. These are outside Schedule III under section 129(1).
For rounding questions, identify the company's scale from the given turnover or income and apply the prescribed unit to every figure.
Eliminate options that mix divisions, such as showing OCI for an AS company.

Common mistakes in Schedule III Overview and General Instructions

Applying Schedule III to a banking or insurance company.
Students assume every company uses one format.
Fix: Recall the second proviso to section 129(1). Banks, insurers and electricity companies follow their own Acts.
Using Division I for an Ind AS company.
The two formats look alike, so the division is not checked.
Fix: Underline 'Ind AS' in the question and switch to Division II format.
Rounding each working figure before adding.
Students treat rounding as part of the calculation.
Fix: Compute exact amounts, then round only the final presented figures. Use one unit throughout.
Omitting previous-year comparative figures or note references.
The question gives only current-year data, so the layout is forgotten.
Fix: Keep a previous-year column and a note number for every line, and state this in theory answers.
Treating notes to accounts as optional extras.
Students focus only on the main statements.
Fix: Remember the Explanation to section 129: the financial statement includes the notes.
Mixing up section 132 and section 133.
Both deal with standards and are quoted together.
Fix: Section 133: Central Government prescribes standards. Section 132: constitution of NFRA.

Worked examples

Example 1

Sundaram Textiles Ltd follows Indian Accounting Standards in its financial statements. Which division of Schedule III applies, and what is the legal basis for using a prescribed format?

Show the solution

Identify the framework: the company follows Ind AS.
Ind AS companies prepare financial statements under Division II of Schedule III.
The legal basis is section 129(1): statements must give a true and fair view, comply with standards notified under section 133, and be in the form given in Schedule III.
Because Division II applies, the statements include other comprehensive income and a statement of changes in equity.

Answer: Division II of Schedule III applies, under section 129(1).

Example 2

State whether section 129(1) and Schedule III apply to (a) Kaveri Power Generation Ltd, a company generating electricity, and (b) Anand Chemicals Ltd, an ordinary manufacturing company. Also state what Anand Chemicals must do if it departs from an accounting standard.

Show the solution

The second proviso to section 129(1) says its provisions do not apply to insurance or banking companies, companies generating or supplying electricity, or classes with a form specified under their own Act.
(a) Kaveri Power generates electricity, so it is outside this sub-section and follows the form under the Electricity Act, 2003.
(b) Anand Chemicals is an ordinary company, so Schedule III applies to it.
If Anand Chemicals does not comply with an accounting standard, section 129(5) requires it to disclose the deviation, the reasons for it and the financial effects, if any.

Answer: (a) No, Kaveri Power follows its own Act's form. (b) Yes, Schedule III applies; any deviation must be disclosed with reasons and financial effects.

Exam tips

Start every theory answer with section 129(1) and state the division. This earns the first marks.
In MCQs, spot the trap words 'Ind AS', 'NBFC', 'bank' and 'electricity' before reading the options.
Quote only the section numbers you are sure of: 129(1), 129(3), 129(5), 129(7), 133.
For rounding questions, show the scale used and apply it to every figure.
Link this topic to the balance sheet and profit and loss formats, since numerical questions apply these rules there.

Practice questions from Statement of Profit and Loss and Balance Sheet (Schedule III of Companies Act, 2013)

Schedule III Overview and General Instructions in other exams

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

Schedule III Overview and General Instructions: frequently asked questions

What is the difference between Division I, II and III of Schedule III?

Division I applies to companies preparing statements under the Accounting Standards. Division II applies to companies following Ind AS. Division III applies to NBFCs that follow Ind AS. Always check which framework the question names.

Does Schedule III apply to banks and insurance companies?

No. The second proviso to section 129(1) excludes insurance and banking companies, and companies generating or supplying electricity. They follow the form under their own governing Acts.

Are notes to accounts part of the financial statements?

Yes. The Explanation to section 129 says a reference to the financial statement includes notes annexed to or forming part of it. Marks are often lost by skipping note references.

What must a company disclose if it does not follow an accounting standard?

Under section 129(5), it must disclose the deviation, the reasons for it and the financial effects, if any. Mention all three in your answer.

Do rounding-off rules change the amounts in my calculation?

No. Rounding is a presentation rule. Calculate exact figures, then show them in the permitted unit for the company's scale, using the same unit throughout.