Question

According to the Companies Act, 2013, 'debit balance of Statement of Profit and Loss' shall be shown as a _______________.

• A. negative figure under the head 'Surplus'
• B. negative figure under the head 'Reserve and Surplus'
• C. positive figure under the head 'Surplus'
• D. positive figure under the head 'Reserve and Surplus'

Answer 1

Answer: (A)

negative figure under the head 'Surplus'

As per section 129 of the Companies Act, 2013, Financial statements has to be disclosed which shall give a true and fair view of the state of affairs of the company or companies, and shall be in the form or forms as may be provided for different class or classes of companies in Schedule III. Schedule III of the act prescribes what all has to be disclosed by the company in its financial statement. As per heading B of the Schedule, Debit balance of statement of profit and loss shall be shown as a negative figure under the head “Surplus”. Similarly, the balance of “Reserves and Surplus”, after adjusting negative balance of surplus, if any, shall be shown under the head “Reserves and Surplus” even if the resulting figure is in the negative.