Post its incorporation with the Registrar, every Company Registration must annually submit its profit and loss statement with the Ministry of External Affairs. This submission is necessary for every registered Company to ensure their smooth functioning in the market. But if you are new to this concept of a Profit/Loss statement, then you can heed this article to understand what goes into the preparation of the Profit and Loss Statement of a registered company.
Profit/Loss Statement of a Company Registration
Each of the below-mentioned provisions will apply to the Company’s Income and expenditure account in preparing the statement of profit and loss.
Revenue from a Finance Company Registration
In respect of a company other than a finance company, revenue from operations shall disclose separately in the notes revenue from the following:
- Sale of products;
- Sale of services;
- Other operating revenues;
Less:
- Excise duty
In respect of a finance company, revenue from operations shall include revenue from the following
- Interest
- Other Financial Services
Revenue under each of the above heads shall be disclosed separately by notes to accounts to the extent applicable.
Finance Costs of the Company Registration
The finance costs of the registered Company are classified as the following:
- Interest Expense
- Other Borrowing Costs
- Applicable Gain or Loss on Foreign Currency Transactions
Other Income of a Company Registration
There is a provision for the other incomes of a Company registration which are classified as the following:
- Interest Income, if the Company is not a Finance Company
- Dividend Income
- Net Profit or Loss on Investment sales
- Other Non-Operating Income, such as net expenses attributable directly to the other incomes
Also Read: One Person Company Registration
More on Information
A registered Company must disclose the notes which detail the additional information regarding the expenditure and Income of the Company on the following items:
Employee Benefits Expense
(a) Employee Benefits Expense showing separately the following:
- Salaries
- Wages
- Contribution to Provident Funds
- Expense on Employee Stock Option Scheme (ESOP)
- Expense on Employee Stock Purchase Plan (ESPP)
- Staff Welfare Expenses
(b) Depreciation and Amortization Expense
(c) Any income or expenditure item exceeding 1% of the revenue from operations or one lakh rupees, whichever is higher
(d) Interest Income
(e) Interest Expense
(f) Dividend Income
(g) Net Profit or Loss on Investment sales
(h) Adjustments to the Investment’s carrying amount
(i) Net profit OR loss on FOREX transactions, which is different from the finance cost
(j) Paying the appointed Auditor as one of the following:
- Auditor
- Matters related to Taxation
- Matters related to Company Law
- Matters related to Management Services
- Matters related to other Services
- Matters related to Reimbursement of Expenses
(k) For Companies covered under section 135 of the Companies Act, the expenditure incurred on Corporate Social Responsibility activities
(l) Any details on items of exceptional and extraordinary circumstances
(m) Earlier Period Items
For Manufacturing Companies
Every Manufacturing Company must submit the following as an extra while disclosing their financial statements:
- Raw Materials used under the broad heads
- Final Goods purchased under the broad heads
Trading Companies: Submit the purchases concerning goods traded under the broad heads.
Companies Rendering or Supplying Services: Submit the overall Income derived from services rendered or supplied under the broad heads.
It is sufficient compliance for the above-mentioned companies to conduct purchases, sales, and consumption of these raw materials and the overall Income from services rendered under broad heads.
Other Companies: Submit the overall Income derived under the broad heads.
For Works in Progress, submit the note works-in-progress under broad heads.
Also Read: CDSCO License: Actions against the CDSCO Acts violations
Capital and Machinery Expenditure
The Company Registration must submit the expenditure incurred on each of the following items separately:
- Consumption of Stores as well as Spare parts
- Power Source and Fuel Containers
- Rent of the plant property
- Building Maintenance
- Machinery Repair and Maintenance
- Insurance Cover
- Rates and taxes on Income
- Other expenses
