COMPANY ACCOUNTING

1. ESWARI ENGINEERING COLLEGE,
CHENNAI
DEPATMENT OF MANAGEMENT STUDIES,
I YEAR, MBA ‘A’ SEC
BY
DARSHINI S, NANDHINI M A, KAVIYA K, KAVIYA A,
PRABHA P, KEERTHANA S, LEKHA SHREE K, DIVYA
ASHOK DIVARE A.

2. TITLE,
COMPANY ACCOUNTS
INTRODUCTION

3. INTRODUCTION
COMPANY ACCOUNTS ARE AN ANALYSIS OF AN
ORGANIZATION’S FINANCIAL ACTIVITY OVER A PERIOD (12
MONTHS). FOR SHOWING THE FINANCIAL PERFORMANCE OF A
COMPANY, ACCOUNTS ARE MAINTAINED AND THEY ARE
PREPARED IN CORPORATE ACCOUNTING.
IT IS A RECORDING OF THE ISSUE OF SHARES,
DEBENTURES, ETC. OF THE COMPANY. OTHER ROUTINE
ACCOUNTS OF THE COMPANY ARE ALSO RECORDED.
WITH ALL THESE DETAILS, EVERY YEAR THE COMPANY
PREPARES ACCOUNTS CONSISTING OF THE CASH FLOW
STATEMENT, THE PROFIT AND LOSS STATEMENT, AND BALANCE
SHEET.

4. WHO SHOULD ATTEND?
THIS COURSE WILL BE OF BENEFIT TO THOSE WHO WORK
WITH FINANCIAL STATEMENTS AND NEED TO UNDERSTAND THE
BASIC ASPECTS OF THE INFORMATION THAT THEY CONTAIN, AND
THOSE LOOKING TO GAIN A BASIC UNDERSTANDING OF A
COMPANY'S ANNUAL REPORT AND FINANCIAL STATEMENTS,
WITHOUT HAVING TO ANALYSE THE INFORMATION IN DETAIL.

5. WHAT YOU WILL GAIN?
AN UNDERSTANDING OF THE PRIMARY FINANCIAL
STATEMENTS AND OTHER MAIN CONTENTS OF PUBLISHED
ANNUAL COMPANY ACCOUNTS. THE FOCUS IS ON DEFINING
ACCOUNTING TERMS AND EXPLAINING KEY CONCEPTS SO THAT
YOU WILL BE ABLE TO READ AN ANNUAL REPORT WITH
CONFIDENCE. NO PRIOR KNOWLEDGE OF COMPANY ACCOUNTS
IS ASSUMED.

6. FEATURES OF A COMPANY
1. SEPARATE LEGAL ASSISTANCE
2. LIMITED LIABILITY
3. TRANSFER OF SHARES
4. SEPARATE PROPERTY
5. PERPETUAL SUCCESSION
6. OWNERSHIP DIVORCED FROM MANAGEMENT

7. ADVANTAGES:
• THE SHAREHOLDERS OF A CORPORATION HAVE LIMITED
LIABILITY.
• A CORPORATE ENTITY CAN RAISE ITS AMOUNT BY
SELLING SHARES AND ISSUING BONDS.
• A CORPORATE COMPANY HOLDER CAN TRANSFER HIS
OWNERSHIP.
• SINCE THE OWNERSHIP OF A CORPORATION CAN BE
TRANSFERRED, IT HAS A PERPETUAL LIFE.
• OWNERS CAN ALSO RECEIVE TAX-FREE BENEFITS.

8. LIMITATIONS:
• GENERALLY, IN SUCH CORPORATIONS, PAYING
TAXES GETS DOUBLE AS THE CORPORATION ITSELF
PAYS TAX DEPENDING ON ITS TYPE AND THEN
SHAREHOLDERS PAY TAXES ON THE DIVIDENDS
RECEIVED BY THEM.
• DUE TO EXCESS TAX FILINGS, IT REQUIRES A LOT
OF PAPERWORK.

9. APPLICATIONS
COMPANY ACCOUNTS ARE A CONSOLIDATION OF A COMPANY’S
FINANCIAL ACTIVITIES FOR ONE YEAR. IT CONSISTS OF THE CASH FLOW
STATEMENT, BALANCE SHEET, AND PROFIT & LOSS ACCOUNT.
1. THE CASH FLOW STATEMENT REVEALS THE MOVEMENT OF CASH IN
AND OUT OF THE BUSINESS OVER THE FINANCIAL YEAR. THERE ARE
THREE CATEGORIES IN THE CASH FLOW STATEMENT. ONE IS OPERATING
ACTIVITIES, THE SECOND ONE IS INVESTING ACTIVITIES AND THE THIRD
ONE IS FINANCING ACTIVITIES.
2. THE BALANCE SHEET OF A COMPANY GIVES AN INSIGHT INTO THE
ASSETS, LIABILITIES, AND SHAREHOLDERS' EQUITY AT A SPECIFIC POINT
OF TIME. IT INDICATES THE FINANCIAL HEALTH OF THE COMPANY.
3. IN A PROFIT & LOSS ACCOUNT, WE CAN SEE THE DETAILS OF THE
REVENUES AND EXPENSES OF BUSINESS THROUGHOUT THE FINANCIAL
YEAR. IT DIFFERS FROM THE BALANCE SHEET AS IT RECORDS
PERFORMANCE OVER SOME TIME RATHER THAN A SNAPSHOT.

10. SHARE CAPITAL MEANING AND ITS TYPES:
THE AMOUNT OF THE CAPITAL IS MENTIONED IN
THE CAPITAL CLAUSE OF THE MEMORANDUM OF
ASSOCIATION REGISTERED WITH THE REGISTRAR OF THE
COMPANIES. TOTAL CAPITAL IS DIVIDED INTO A NUMBER
OF SMALL INDIVISIBLE UNITS OF FIXED AMOUNT AND
EACH SUCH UNIT IS CALLED A SHARE. A SHARE IS
NOTHING BUT A SHARE IN THE CAPITAL OF THE
COMPANY. AS THE TOTAL CAPITAL OF THE COMPANY IS
DIVIDED INTO SHARES, THE CAPITAL OF THE COMPANY
IS CALLED SHARE CAPITAL.

11. TYPES;
1.AUTHORISED CAPITAL
2.ISSUED CAPITAL
3.SUBSCRIBED CAPITAL
4.CALLED-UP CAPITAL
5.UNCALLED CAPITAL:
6.PAID UP CAPITAL:
7.UNPAID CAPITAL:
8.RESERVE CAPITAL:

12. SHARES
THE FUNDS REQUIRED BY THE COMPANY
IS CALLED AS SHARE CAPTIAL WHERE AS
THESE SHARE CAPITAL IS DIVIDED INTO
SEVERAL SMALL UNITS WHICH IS KNOWN AS
SHARES

13. TYPES OF SHARES
i. Cumulative preference share
ii. Non- cumulative preference share
iii. Participating preference share
iv. Non-participating preference share
v. Convertible preference share
vi. Non- convertible preference share
vii. Redeemable preference share
viii.Irredeemable preference share
Equity Share
Preference Share

14. STATUTORY BOOKS:
STATUTORY BOOKS ARE THE OFFICIAL RECORDS KEPT BY THE
COMPANY RELATING TO ALL LEGAL AND STATUTORY MATTERS. A
COMPANY'S STATUTORY BOOKS ARE USUALLY KEPT AT THE
REGISTERED OFFICE OF THE COMPANY. THE BOOKS SHOULD BE
AVAILABLE TO THE GENERAL PUBLIC FOR INSPECTION DURING
REASONABLE OFFICE HOURS.
THE TYPICAL CONTENTS OF A COMPANY'S STATUTORY BOOK ARE:
* THE REGISTER OF SHAREHOLDERS
* THE REGISTER OF COMPANY DIRECTORS AND SECRETARIES
* THE REGISTER OF COMPANY DIRECTORS' INTERESTS
* THE REGISTER OF CHARGES
* THE REGISTER OF INTERESTS IN SHARES IF THE COMPANY IS A
PLC.

15. MAINTENANCE OF BOOKS OF ACCOUNTS:
EVERY COMPANY HAS TO MAINTAIN BOOKS OF ACCOUNTS, AT THE REGISTERED OFFICE OR ANY
OFFICE THAT THE BOARD OF DIRECTORS MAY DECIDE. IF THE COMPANY IS MAINTAINING BOOKS
AT AN OFFICE OTHER THAN THE REGISTERED OFFICE, IT HAS TO INTIMATE THE SAME TO
REGISTER OF COMPANIES(ROC). THE COMPANY CAN MAINTAIN THE ACCOUNTS ELECTRONICALLY
ALSO. BOOKS SHOULD BE MAINTAINED FOR A PERIOD OF 8 YEARS FROM THE END OF THE
RELEVANT FINANCIAL YEAR. FURTHERMORE, MAINTAINING THE BOOKS OF ACCOUNTS WAS
NECESSARY TO GET A CORRECT SUMMARY OF THE TRANSACTIONS MADE BY THE COMPANY.
BESIDES, IT ALSO SPECIFIES THE PERIOD FOR WHICH THE COMPANY HAS KEPT THE RECORD AND
THE PLACE OF KEEPING.
BOOKS OF ACCOUNTS TO BE MAINTAINED:
CASH FLOW STATEMENT
RECORDS OF SALES AND PURCHASES
RECORDS OF ASSETS AND LIABILITIES
ITEMS OF COST
DEEDS, VOUCHERS, WRITING, DOCUMENTS, MINUTES, AND REGISTERS WHETHER IN PHYSICAL
OR ELECTRONIC MODE.

16. SUMMARY
COMPANY ACCOUNTS ARE A
SUMMARY OF AN ORGANISATION’S
FINANCIAL ACTIVITY OVER A 12
MONTH PERIOD. THEY ARE
PREPARED FOR COMPANIES HOUSE
AND HM REVENUE & CUSTOMS
EVERY YEAR AND CONSIST OF THE
BALANCE SHEET, THE PROFIT AND
LOSS STATEMENT, AND THE CASH
FLOW STATEMENT.

17. THANK YOU