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CA Intermediate · Corporate and Other Laws · Accounts of Companies

Veda Textiles Ltd, a public company, closed its books for the financial year ended 31 March. Its board wants to know where the financial statements must be kept and which documents are legally part of the 'financial statement' of a company (other than a One Person Company, small company or dormant company). Which of the following correctly lists the components of the financial statement under the Companies Act, 2013?

A company's financial statement comprises the balance sheet, the statement of profit and loss, the cash flow statement where applicable, the statement of changes in equity where applicable, and explanatory notes annexed to them. The Directors' Report and Auditor's Report are separate documents and are not components of the financial statement.

  1. ABalance sheet, statement of profit and loss, cash flow statement (where applicable), statement of changes in equity (where applicable) and explanatory notes annexed to theseCorrect
  2. BBalance sheet and statement of profit and loss only, with notes being optional
  3. CBalance sheet, statement of profit and loss and the Directors' Report
  4. DBalance sheet, statement of profit and loss and the Auditor's Report

Explanation

The Act defines financial statement to include the balance sheet, profit and loss account (or income and expenditure account), cash flow statement for the year, statement of changes in equity where applicable, and any explanatory note annexed to or forming part of these. The Directors' Report and the Auditor's Report are separate documents that are attached to the financial statements but are not part of them. Hence option B is wrong because it treats notes as optional.

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