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Accounts Of Companies Flashcards

1
Q

What must a company maintain under Section 128?

A

Books of account, relevant papers, and financial statements for every financial year, reflecting all transactions.

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2
Q

Where are books of account required to be kept?

A

At the registered office or another location in India as approved by the Board of Directors.

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3
Q

Which accounting system must companies follow?

A

Accrual basis and double-entry system, ensuring a true and fair view of financial position.

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4
Q

How long must books of account be preserved?

A

For 8 years preceding the current financial year, or longer if ordered by Central Government.

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5
Q

Who is allowed to inspect books of account?

A

Any director during business hours; for subsidiaries, only with a Board resolution.

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6
Q

Are electronic books of account permitted?

A

Yes, under Rule 3, must be accessible in India with an audit trail post-April 2023.

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7
Q

What’s the requirement for branch office books?

A

Proper books maintained at the branch, with summarized returns sent quarterly to head office.

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8
Q

What’s the penalty for non-compliance with Section 128?

A

Fine of ₹50,000 to ₹5 lakh for MD, Whole-Time Director (finance), CFO, or responsible person.

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9
Q

What notice is filed if books are kept elsewhere?

A

Form AOC-5 within 7 days, specifying the full address of the alternate location.

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10
Q

What happens if directors request foreign info?

A

Directors can request in writing; company must provide financial details within 15 days.

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11
Q

What must financial statements reflect under Section 129?

A

A true and fair view of the company’s state, complying with accounting standards and Schedule III.

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12
Q

What documents are part of financial statements?

A

Balance sheet, profit & loss/income-expenditure, cash flow statement, and changes in equity (if applicable).

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13
Q

Which companies are exempt from Section 129 provisions?

A

Insurance, banking, electricity companies, or those with forms prescribed by their specific Acts.

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14
Q

What’s required for companies with subsidiaries?

A

Consolidated financial statements (CFS) including subsidiaries, to be presented at the AGM.

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15
Q

What form is used for subsidiary salient features?

A

Form AOC-1, as per Rule 5 of the Companies (Accounts) Rules, 2014, with key details.

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16
Q

What if financial statements deviate from standards?

A

Must disclose the deviation, its reasons, and its financial effects under Section 129(5).

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17
Q

When are financial statements laid before shareholders?

A

At every Annual General Meeting (AGM) by the Board of Directors for approval.

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18
Q

Can the Central Government grant exemptions?

A

Yes, it can exempt companies from Section 129 in public interest via notification.

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19
Q

What’s the penalty for violating Section 129?

A

Up to 1 year imprisonment, fine of ₹50,000 to ₹5 lakh, or both for MD, CFO, or directors.

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20
Q

What’s the role of Schedule III in Section 129?

A

Provides format for financial statements: Division I for Accounting Standards, Division II for Ind AS.

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21
Q

What can the Central Government mandate under Section 129A?

A

Certain unlisted companies to prepare and submit periodical financial results as prescribed.

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22
Q

What’s the filing deadline for periodical results?

A

Within 30 days of the end of the specified period, with the Registrar.

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23
Q

What approvals are required for periodical results?

A

Board approval, followed by an audit or limited review as per prescribed rules.

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24
Q

What’s the purpose of introducing Section 129A?

A

To enhance corporate governance and transparency in large unlisted companies.

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25
Are there rules for Section 129A as of now?
No specific rules or notifications issued as of April 30, 2024.
26
Which companies does Section 129A apply to?
Classes of unlisted companies as specified by the Central Government in future rules.
27
What format must periodical results follow?
To be prescribed by the Central Government when rules are notified.
28
How many unlisted companies might be affected?
Over 11 lakh unlisted companies in India, some large enough for Section 129A.
29
What’s the process for periodical financial results?
Prepare results, get Board approval, audit/review, and file with the Registrar.
30
What’s the current status of Section 129A enforcement?
Awaits Central Government rules to become fully operational.
31
Who can apply for re-opening accounts under Section 130?
Central Govt, Income Tax authorities, SEBI, statutory bodies, or any concerned person.
32
What triggers the re-opening of accounts?
A court or tribunal order due to fraud or mismanagement affecting reliability.
33
What’s the time limit for re-opening accounts?
Maximum 8 financial years prior, unless extended by Central Government order.
34
What’s the court’s process before ordering re-opening?
Notify Central Govt, IT authorities, SEBI, etc., and consider their inputs.
35
Are accounts final after re-opening?
Yes, once recast under Section 130(2), no further revisions allowed.
36
Can a company initiate re-opening on its own?
No, it requires a court or tribunal order based on an application.
37
What’s the main purpose of Section 130?
To correct financial statements prepared fraudulently or mismanaged.
38
What happens after a re-opening order is issued?
Company revises accounts as per court/tribunal directions.
39
Can re-opening exceed 8 years?
Yes, if Central Govt directs preservation beyond 8 years under Section 128.
40
Who enforces a re-opening order?
A court or tribunal with competent jurisdiction.
41
When can directors revise financial statements?
If they don’t comply with Section 129 or 134, for any of the 3 prior years.
42
What’s the time scope for voluntary revision?
Limited to the three preceding financial years before the current year.
43
What’s the first step in voluntary revision?
Apply to Tribunal in Form NCLT 1 within 14 days of Board decision.
44
What must be filed after Tribunal approval?
Certified copy of Tribunal order with Registrar within 30 days.
45
How often can revision be done?
Only once per financial year, no repeat revisions allowed.
46
What details must the revision application include?
Financial year, key personnel, Board resolution, and revision grounds.
47
What’s the Tribunal’s process for approval?
Notify Central Govt and IT, hear auditor, then issue an order.
48
What follows Tribunal approval?
Hold general meeting, publish reasons, file revised statements in 30 days.
49
What’s the scope of voluntary revision?
Limited to fixing non-compliance with Sections 129 or 134 only.
50
Who sets the rules for voluntary revision?
Central Government, under Rule 77 of NCLT Rules, 2016.
51
What’s the primary role of NFRA?
Oversee accounting and auditing standards, ensure compliance by auditors.
52
When and where was NFRA established?
Constituted on October 1, 2018, with headquarters in New Delhi.
53
Which companies fall under NFRA jurisdiction?
Listed companies and large unlisted public firms (e.g., ₹500 crore capital).
54
What are NFRA’s key functions?
Recommend standards, monitor compliance, investigate auditors, review quality.
55
Who makes up the NFRA?
A Chairperson (eminent expert) and up to 15 part/full-time members.
56
What powers does NFRA possess?
Civil court powers under CPC for evidence, summoning, and inspection.
57
Can NFRA investigate auditors independently?
Yes, suo moto or on Central Government referral for misconduct.
58
How does NFRA enforce compliance?
Reviews financials/audits, directs improvements, and publishes findings.
59
Who appoints NFRA members?
Central Government, per NFRA Appointment Rules, 2018.
60
What’s NFRA’s duty towards public interest?
Protect investors and creditors via high-quality accounting standards.
61
Who prescribes accounting standards under Section 133?
Central Government, based on ICAI recommendations and NFRA consultation.
62
What’s the purpose of Section 133?
To ensure uniform accounting standards across all companies in India.
63
What’s NFRA’s role in setting standards?
Consulted by Central Govt on ICAI’s proposed standards.
64
Are accounting standards mandatory?
Yes, companies must follow standards notified under Section 133.
65
Can the Central Government modify standards?
Yes, with addendums after consulting ICAI and NFRA.
66
What legal framework supports Section 133?
Companies Act, 2013, and Chartered Accountants Act, 1949.
67
Who initiates accounting standard proposals?
ICAI submits recommendations to NFRA for review.
68
What does NFRA do with ICAI proposals?
Examines and advises Central Govt before final notification.
69
Are there exemptions from Section 133?
Yes, for companies under specific Acts like banking or insurance.
70
What’s the outcome of Section 133?
Binding accounting standards notified for company compliance.
71
Who approves financial statements under Section 134?
The Board of Directors before they are signed and presented.
72
Who signs the financial statements?
Chairperson (if authorized) or two directors (one MD), plus CEO, CFO, and CS if appointed.
73
What must the Board’s report include?
Financial summary, state of affairs, dividends, reserves, and CSR policy details.
74
When is the Board’s report presented?
Attached to financial statements and laid before the AGM.
75
What documents are attached to statements?
Auditor’s report, as required under Section 134(2).
76
What’s the signing rule for One Person Companies?
Only one director signs the financial statements.
77
What CSR details are disclosed?
CSR policy and expenditure included in the Board’s report.
78
Can the Chairperson sign alone?
Yes, if the Board authorizes the Chairperson to sign solo.
79
What’s the purpose of Section 134?
Ensure transparency in financial reporting for shareholders.
80
Are explanatory notes part of statements?
Yes, notes explaining financials are included per Section 134.
81
Which companies must follow CSR rules?
Net worth ₹500 crore, turnover ₹1,000 crore, or net profit ₹5 crore in any prior year.
82
What’s the minimum CSR spending requirement?
2% of average net profits from the last three financial years.
83
Who forms the CSR Committee?
At least 3 directors, including one independent director.
84
What’s the role of the CSR Committee?
Formulate and recommend a CSR policy to the Board for approval.
85
Can CSR surplus be counted as profit?
No, surplus from CSR activities isn’t part of business profits.
86
What if a company is newly formed?
Spends 2% of average profits from available prior years.
87
What’s the Board’s responsibility in CSR?
Ensure CSR funds are spent as per the approved policy.
88
Are employee-only CSR activities valid?
No, spending solely on employees doesn’t qualify as CSR.
89
What’s disclosed in the Board’s report?
Details of CSR policy and actual expenditure made.
90
What’s the objective of Section 135?
Promote social responsibility among profitable companies in India.
91
When must financial statements be sent to members?
At least 21 days before the Annual General Meeting (AGM).
92
What documents are sent to members?
Financial statements, CFS, auditor’s report, and annexed papers.
93
Who else receives these documents?
Debenture trustees and any persons entitled under the Act.
94
Can members inspect company documents?
Yes, at the registered office during business hours.
95
What’s the penalty for non-compliance?
Company fined ₹25,000; officers in default fined ₹5,000.
96
What’s required for foreign subsidiaries?
Audited/unaudited statements on website, translated if needed.
97
What’s the rule for Nidhi companies?
Public notice suffices for shareholders with <₹1,000 or 1% stake.
98
Can statements be sent with shorter notice?
Yes, if AGM notice is shortened under Section 101.
99
What’s the purpose of Section 136?
Ensure members have access to financial information.
100
Where are documents available for inspection?
Kept at the registered office for member review.
101
When must financial statements be filed?
Within 30 days of AGM, or 180 days for OPC from year-end.
102
What forms are used for filing?
AOC-4 for standalone, AOC-4 CFS for consolidated, AOC-4 XBRL as applicable.
103
Which companies must file in XBRL format?
Listed companies, or those with ₹5 crore capital or ₹100 crore turnover.
104
What if AGM doesn’t adopt statements?
File un-adopted within 30 days, adopted ones after adjourned AGM.
105
What’s filed for foreign subsidiaries?
Audited or unaudited statements, with English translation if required.
106
What’s the penalty for late filing?
Company: ₹10,000 + ₹100/day (max ₹2 lakh); Officers: max ₹50,000.
107
What if AGM isn’t held?
File within 30 days of due date, with reasons for no AGM.
108
What’s Form CSR-2 used for?
Annual CSR report filed as an addendum for applicable firms.
109
Are there exemptions from XBRL filing?
Yes, NBFCs, banking, insurance, and housing finance companies.
110
What’s the goal of Section 137?
Make company financials publicly accessible via Registrar.
111
Which companies require an internal auditor?
Listed, unlisted public (₹50 crore capital), private (₹200 crore turnover).
112
Who can be appointed as an internal auditor?
Chartered/Cost Accountant or other professional, employee or external.
113
What’s the turnover threshold for private firms?
₹200 crore or more in the preceding financial year.
114
Who determines the internal audit scope?
Audit Committee or Board, in consultation with the auditor.
115
What’s the compliance timeline for new rules?
Within 6 months of Section 138 applicability.
116
Are IFSC companies exempt from internal audit?
Yes, unless their articles require it.
117
What’s the purpose of internal audit?
Evaluate compliance and operational efficiency of company functions.
118
What’s the loan threshold for audit requirement?
₹100 crore or more from banks/financial institutions.
119
To whom does the internal auditor report?
The Board, as per the methodology set by the company.
120
Which rule governs Section 138?
Rule 13 of the Companies (Accounts) Rules, 2014.

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