Quote:
Originally Posted by aimtoachieve
I tried to skim through the Fourth Schedule of Companies Ordinance, 1984, but there was no categorical instruction of making Profit and Loss Account in form of Income Statement, rather the verbatim term (Income Statement) is not mentioned at all. However, it does segregate different kinds of expenses (administrative expenses, other operating expenses). But, you can easily segregate these expenses in form of a T-Account also. So, why can't we go with T-account? I do not have Accounting background, so I am obviously speaking from a somewhat layman-viewpoint... shall be grateful if you clarify.
Secondly, when Balance Sheet is presented in form of statement, then the final balance will not be equal to the balance had the Balance Sheet been presented in a t-format? This is because in statement form, we first subtract current liabilities to calculate Net Assets, which are then shown to be equal to Capital, Loan, etc.? While in t-format current liabilities and capital are on the same side. Kindly clarify this too.
Regards
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First you said you don't have accounting background so you are taking a huge risk second forth and fifth schedule just provide information that needs to be included in financial statements further normally professionals use same wording as used in these schedule and IAS 1 also provides guidance for presentation of Financial Statements I don't even understand why in CSS exams t accounts were being used in CA education as well as practically T-Accounts are used for ledgers and I have never encountered manual ledgers in my professional experience so i am just guessing from experience that at year end you close ledgers and every thing is dumped into PNL and BS ledger to complete closing procedures as far as presentation of financial statements is considered IAS 1, CO 1984 and SECP directives all require FS to be prepared in vertical format, standards are like laws there may be logic behind them but once enacted you must follow them.
As far as your second point is concerned you are mixing the concept of fund account and balance sheet and another thing I don't understand is that why aren't people taking a look at Published Financial Statements of companies you can find them at their website or in case of listed companies you can find them at website of Karachi Stock Exchange that can help you understand presentation of Financial Statements.