GENERAL INSTRUCTIONS FOR PREPARATION OF STATEMENT OF PROFIT AND LOSS :

1. The Provisions of this Part shall apply to the Income and Expenditure account referred to in sub-clause (40)
of Section 2, in like manner as they apply to a statement of profit and loss.
2. (A) In respect of a company other than a finance company revenue from operations shall disclose separately
in the notes revenue from –
(a) Sale of products;
(b) Sale of services;
(c) Other operating revenues;
Less:
(d) Excise duty.
(B) In respect of a finance company, revenue from operations shall include revenue from –
(a) Interest; and
(b) Other financial services
Revenue under each of the above heads shall be disclosed separately by way of notes to accounts to the extent
applicable.
3. Finance Costs
Finance costs shall be disclosed as:
(a) Interest expense;
(b) Other borrowing costs;
(c) Applicable net gain/loss on foreign currency transaction and translation.
4. Other Income
Other income shall be classified as:
(a) Interest Income (in case of a company other than a finace company);
(b) Dividend Income;
(c) Net gain/loss on sale of investments
(d) Other non-operating income (net of expenses directly attributable to such income).
5. Additional Information
A Company shall disclose by way of notes additional information regarding aggregate expenditure and income on the following items:-
(i) (a) Employee Benefits Expense [showing separately (i) salaries and wages, (ii) contribution to provident and other funds, (iii) expense on Employee Syock Option Scheme (ESOP) and Employee Stock Purchase Plan (ESPP), (iv) staff welfare expense].
(b) Depreciation and amortization expense;
(c) Any item of income or expenditure which exceeds one percent of the revenue from operations or Rs. 1,00,000, whichever is higher;
(d) Interest Income;

(e) Interest Expense;
(f) Dividend Income;
(g) Net gain/loss on sale of investments;
(h) Adjustments to the carrying amount of investments;
6. Net gain or loss on foreign currency transaction and translation (other than considered as finance cost);
7. Payments to the auditors as (a) audit, (b) for taxation matters, (c) for company matters, (d) for management services, (e) for other services, (f) for reimbursement of expense;
8. Details of items of exceptional and extraordinary nature;
(i) Prior Period Items;
(ii) (a) In the case of manufacturing companies;
(i) Raw materials under broad heads.
(ii) Goods purchased under broad heads.
(b) In the case of trading companies, purchases in respect of goods traded in by company under broad heads.
(c) In the case of companies rendering or supplying services, gross income derived from services rendered or supplied under broad heads.
(d) In the case of a company, which falls under more than one of the categories mentioned in (a), (b) and
(c) above, it shall be sufficient compliance with the requirements herein if purchase, sales and consumption
of raw material and the gross income from services rendered is shown under broad heads.
(e) In the case of other companies gross income derived under broad heads.
(iii) In the case of all concerns having work-in-progress, work-in-progress under broad heads.
(iv) (a) The aggregate, if material, of any amounts set aside or propose to be set aside, to reserve , but not including provisions made to meet any specific liability, contingency or commitment known to exit at the date as to which the Balance Sheet is made up.
(b) The aggregate, if material, of any amounts withdrawn from such reserves.
(v) (a) The aggregate, if material, of the amounts set aside to provisions made for meeting specific liabilities, contingencies or commitment.
(b) The aggregate, if material, of the amounts withdrawn from such provisions, as no longer required.
(vi) Expenditure incurred on each of the following items, separately for each item : –
(a) Consumption of stores and spare parts
(b) Power & fuel
(c) Rent
(d) Repairs to building
(e) Repairs to Machinery
(f) Insurance
(g) Rates and Taxes, excluding, taxes on income.
(h) Miscellaneous expense,

(vii) (a) Dividends from subsidiary companies
(b) Provisions for losses of subsidiary companies
(viii) The profit and loss account shall also contain by way of a note the following information, namely:-
(a) Value of imports calculated on C.I.F. basis by the company during the financial year in respect of –
I. Raw materials;
II. Components and spareparts;
III. Capital goods;
(b) Expenditure in foreign currency during the financial year on account of royalty, know-how, professional and consultation fees, interest, and other matters;
(c) Total value if all imported raw materials, spare parts and the components consumed during the
financial year and the total value of all indigenous raw materials, spare parts and components
similarly consumed and the percentage of each to the total consumption;
(d) The amount remitted during the year in foreign currencies on account of dividends with specific mention of the total number of nonresidents shareholders, the total number of shares held by them on which the dividends were due and the year to which the dividends related;
(e) Earnings in foreign exchange classified under the following heads, namely:-
I. Exports of Goods calculated on F.O.B. basis;
II. Royalty, know-how, professional and consultation fees;
III. Interest and Dividends;
IV. Other Income, indicating the nature thereof
Note:- Broad heads shall be decided taking into account the concept of materiality and presentation of true and fair view of Financial Statements.
General Instructions for the preparation of consolidated financial statements is given in Lesson 5.