Formats of Income Statement and Balance Sheet Essay Example for Free

Formats of Income Statement and Balance Sheet EssayIncome statement In the field of furbish up proprietary and partnership concerns there argon no prescribed forms of the income statement and rest poll. Their preparation is overly desirable but not compulsory. However, they are generally inclined(p). In the case of craft concern, a trading flyer and in the case of a manufacturing concern, a manufacturing account and a trading account earth-closet also be prepared. In such a case, the account heading is mentioned as follows Manufacturing/trading and cyberspace and divergence account. In the case of joint crinkle companies preparation of the make and loss account and balance sheet every year is compulsory. There is no prescribed form (except in the case of banking and amends companies) of the income statement or profit and loss account. The account is titled as Profit and loss account The results of manufacturing and trading activities may however, be shown separately in the account. The profit and loss account is usually prepared in a T shape. In the case of joint stock club, the manufacturing, trading and profit and loss account is prepared in the above format except with three modificationsI.The heading given is hardly Profit and loss account for taxation in the profit and loss account II.The net profit is shown after making provisions for taxation in the profit and loss account III.Figures, for the previous close, if any, fork over also to be given. Profit and loss appropriation account In the case of joint stock companies, a profit and loss appropriation account is also prepared. It explains as to how the profit earned during the period has been distributed. Balance sheet There is no prescribed form of balance sheet for a bushel proprietary or a partnership concern. However, the assets and liabilities may be shown in any of the following ninesI.Liquidity orderII.Permanency Order In case the concern adopts liquidity order, the assets w hich are more readily convertible into funds are taken into account initially and those which are not so readily convertible are taken into account subsequently. Similarly those liabilities which are payable first are taken into account initially and those payable later on are taken into account subsequently and so on. In the case of permanency order, the reverse order is followed. As per the law applicable to some governments, every balance sheet of a gild shall give a true and fair view of the state of affairs of the society as at the end of the financial year. Similarly, every profit and loss account of a company shall give a true and fair view of the profit or loss account of the company for the financial year.