General Instructions
Rules for preparation of Balance Sheet and Statement of Profit and Loss
Classification of Assets
Current vs Non-CurrentAn asset shall be classified as current when it satisfies any of the following criteria:
- (a) it is expected to be realised in, or is intended for sale or consumption in, the company's normal operating cycle;
- (b) it is held primarily for the purpose of being traded;
- (c) it is expected to be realised within twelve months after the reporting date; or
- (d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
All other assets shall be classified as non-current.
Classification of Liabilities
Current vs Non-CurrentA liability shall be classified as current when it satisfies any of the following criteria:
- (a) it is expected to be settled in the company's normal operating cycle;
- (b) it is held primarily for the purpose of being traded;
- (c) the liability is due to be settled within twelve months after the reporting period; or
- (d) it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.
All other liabilities shall be classified as non-current.
Operating Cycle
DefinitionAn operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. Where the normal operating cycle cannot be identified, it is assumed to have a duration of twelve months.
Trade Receivables & Payables
Classification- A receivable shall be classified as a “trade receivable” if it is in respect of the amount due on account of goods sold or services rendered in the normal course of business.
- A payable shall be classified as a “trade payable” if it is in respect of the amount due on account of goods purchased or services received in the normal course of business.
Rounding Off
Presentation of Figures| Turnover | Rounding Off |
|---|---|
| Less than ₹100 Crore | To the nearest hundreds, thousands, lakhs or millions, or decimals thereof |
| ₹100 Crore or more | To the nearest lakhs, millions or crores, or decimals thereof |
Once a unit of measurement is used, it should be used uniformly in the Financial Statements.
Comparatives
Previous Period FiguresExcept in the case of the first Financial Statements laid before the Company (after its incorporation), the corresponding amounts (comparatives) for the immediately preceding reporting period for all items shown in the Financial Statements including notes shall also be given.