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CS Executive · Corporate Accounting and Financial Management · Introduction to Corporate Accounting

A company's financial statements do not comply with a notified accounting standard. What must the company do under section 129(5) of the Companies Act, 2013?

Under section 129(5), when financial statements do not comply with the accounting standards, the company must disclose the deviation, the reasons for it and the financial effects, if any, arising from it. Disclosing only the effect is insufficient, and no prior government approval is required.

  1. ADisclose the deviation, the reasons for it and the financial effects, if anyCorrect
  2. BWithdraw the statements and refile them within thirty days with the Registrar
  3. CDisclose only the financial effect, since reasons are not required
  4. DObtain prior approval of the Central Government before laying the statements at the AGM

Explanation

Section 129(5) requires the company to disclose in its financial statements the deviation from the accounting standards, the reasons for such deviation and the financial effects, if any. Disclosing only the effect is incomplete, and no prior government approval is stated.

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