Revised schedule VI | Final Accounts | Accounting for equity capital

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The Revised Schedule VI of the Companies Act, 1956, was introduced by the Ministry of Corporate Affairs and came into effect from 1st April 2011. It brought significant changes in the format and disclosure requirements of financial statements for Indian companies. The main objective of this revision was to bring Indian financial reporting standards in line with international practices and to ensure more transparency, uniformity, and comparability in financial statements.

Under the Revised Schedule VI, the balance sheet format was standardized into a vertical form, moving away from the earlier horizontal (T-form) presentation. Assets and liabilities are now classified into current and non-current categories, which helps stakeholders better assess a company’s liquidity position and long-term stability. Similarly, the profit and loss account was replaced with the Statement of Profit and Loss, which provides a more detailed view of revenues, expenses, and profits.

The revised format also introduced stricter disclosure norms. Companies are now required to disclose information such as contingent liabilities, commitments, related party transactions, and shareholding patterns. It also aligned terminology and grouping with global practices, for example using the term “Statement of Profit and Loss” instead of “Profit and Loss Account.”

The adoption of Revised Schedule VI has made financial statements more meaningful for investors, analysts, and regulators. It not only improved clarity but also helped Indian companies prepare for convergence with International Financial Reporting Standards (IFRS).

In conclusion, the Revised Schedule VI is a landmark step toward enhancing corporate governance and financial transparency in India.