Corporate Profit & Loss Account
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Transcript of Corporate Profit & Loss Account
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8/4/2019 Corporate Profit & Loss Account
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Corporate Profit and Loss
Account
Presented by:-
Sumit Gor (43) Anuj Jain (27)
Nirmit Shelat (42)
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Introduction
Purpose :-
Shows total income, expenditure, Net
profit earned, dividend paid to shareholders,
profit retained and ploughed back to company.
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Features of P/L Account
Prepared for the period. Normally yearly basis.
Period starting from 1st April to 31st March
(India).
Also drawn for each quarter (SEBI Request)
Vertical presentation, horizontal out of
fashion.
Comparative position of previous year.
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Feature(Cont.)
Surplus of profit before transaction is known
as PBT and after tax as PAT.
Grouping of Income components andExpenditure components. Reference to
schedules (J to Q).
Appropriation of Profit and transfer of Balance
to Balance Sheet.
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Features (Cont.)
In B/L two sides match, P/L two sides does not
match.
At the bottom, signatures of prepares andAuditors, Name of officers (CMD, Director
Finance and Control and VP Legal and
Company Secretary).
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Income
Base for recognition (AS-9)
Sale of goods
R
endering services Use by other enterprise resources yielding
interest, dividends, royalties, rentals
Other revenues associated with goods like export
incentives
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Income
Can also be grouped as,
Domestic Sales (Schedule J)
Exports (Schedule K) Others
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Expenditure
Material Consumed and purchase of goods (L)
Disclosure of Details
Quantitative details of different raw materialconsumed with Raw materials bifurcated in
Imported
Indigenous
CIF value of imports (Cost, Insurance, Freight) seller must pay marine insurance, costs and freight necessary to bring the
goods the named port of destination, but risks after delivery are transferred to
the buyer
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Expenditure
Manufacturing and other expenses (M)
Manufacturing Exp expense converting raw
materials into finished goods pertain to plants and
factories
Selling expenses relate to market research,
advertising, sales promotion, sales incentives
Admin Exp expense in day to day activities andgeneral management of the company
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Expenditure
Interest (N)
Cost of borrowed funds payable to lenders
Cost of both long term and as well as workingcapital borrowing
Excise Duty
If levied, payable to government. If recovered
from customers when finished goods are soldthen it is not expense
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Expenditure
Depreciation (E)
Impairment of loss on FA (E) as per AS -28
Adjustments due to (I
ncrease)/ Decrease instock of finished goods and WIP (O) An Increase adds to profit and vice versa. Since this
increase does not reflect an increase in sales, it is usuallyshown on expenditure side of P/L acct by way of (-) figure
and thus deducted from expense Decrease in inventory automatically becomes part of
expenditure
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Expenditure
Provision for Contingencies Net (P)
As per AS 4
Contingency: a condition or situation, theultimate outcome of which, gain or loss, will beknown or determined only on the occurrence, ornon-occurrance, of one or more uncertain futureevents
Estimates of the outcome and of the financialeffect of contingencies are determined by
judgment of mgmt
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Expenditure
Profit Before Tax
Excess of income over expenditure and before
paying IT to government.
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Expenditure
Provision for Income Tax
Accounting disclosures are governed by theCompanies Act
Income tax payable on PBT is governed by IncomeTax Act, 1961 to calculate and determine taxableincome.
Allows more than the amount incurred in certain
cases and provides rebates and reliefs in a numberof cases. So PBT arrived at as per P/L is not theprofit for tax purpose
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Expenditure
Provision for Income Tax
PBT for tax purpose may be higher or lower than
PBT as per fin statements
Even taxable profit is nil, companies are made to
pay the minimum alternate tax (MAT).
Every year the finance act prescribes rates of
income tax and surcharge. ICAI standards are AS -22
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Expenditure
Profit after Tax
PAT is what is available to the providers of share
capital as return on their investment
Providers of preference capital are entitled to a
fixed return only.
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Expenditure
Balance available for Appropriations
Partly to shareholders and partly retained forploughing back into business.
Provision for dividend to preference share holders
Payment of interim dividend to equityshareholders
Provision for final dividend to equity shareholders
Provision for corporate dividend tax
Transfer to various reserves such as generalreserves, debenture redemption reserve
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Expenditure
Earning Per Share
Crucial measure and indicator of the financial
performance of a company.
AS 20 prescribes the principles and norms of
treatment of EPS both basic and diluted
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