Guides
Financial statements, explained for Indian practices
Practical guides on preparing financial statements — the Companies Act Schedule III and the ICAI LLP and Non-Corporate formats — written by a practising Chartered Accountant.
What changed for FY 2025-26 and FY 2026-27
- The New Labour Codes change the gratuity and leave numbers. The four Codes took effect on 21 November 2025. ICAI's FAQs of 26 December 2025 treat the resulting increase as a past service cost under AS 15 — not an actuarial loss. This is measurement, not presentation, so it hits companies, LLPs and non-corporate entities alike, and it is the item most likely to be wrong in a 31 March 2026 balance sheet. How to account for it.
- The ICAI Non-Corporate and LLP formats are now phased in. By announcement dated 31 March 2026 they apply for accounting periods beginning on or after 1 April 2025 to entities whose turnover exceeds Rs 5 crore, and from 1 April 2026 to all entities. FY 2024-25 was voluntary. Read the detail.
- Fewer companies need a Cash Flow Statement. MCA notification G.S.R. 880(E) dated 1 December 2025 raised the small company limits to Rs 10 crore of paid-up capital and Rs 100 crore of turnover, and a small company need not present one. Who must prepare one.
- Schedule III itself is unchanged. It has not been amended since the notification of 24 March 2021, so the Division I format, the eleven ratios and the ageing schedules read the same for FY 2025-26 and FY 2026-27 as they did last year.
Schedule III Balance Sheet Format (Division I)
Every head and sub-head of the Division I balance sheet, how to prepare one, and a quick-reference table.
Read guide →Schedule III Profit and Loss Format (Division I)
Every line of the Division I Statement of Profit and Loss — revenue, expenses, tax and EPS — how to prepare one, and a quick reference.
Read guide →Trial Balance to Financial Statements: a CA workflow
The step-by-step workflow to turn a Trial Balance into a Balance Sheet, P&L, Cash Flow and notes — plus manual vs software.
Read guide →ICAI LLP Financial Statements Format
The LLP Balance Sheet and Statement of Profit and Loss line by line — Partners’ funds, partners’ remuneration, and audit thresholds.
Read guide →ICAI Non-Corporate Entity Financial Statements Format
The Non-Corporate Entity format for proprietorships, firms and trusts — Owners’/Partners’ funds and the MSME vs Large classification.
Read guide →Notes to Financial Statements (Schedule III)
How the notes are ordered — accounting policies, line-item notes, ageing schedules and the 2021 amendment disclosures.
Read guide →Schedule III Financial Ratios: the 11 mandatory ratios
The eleven ratios companies must disclose in Division I notes — formulas, numerators, denominators, and the 25% variance rule.
Read guide →Depreciation under Schedule II & the PPE note
Useful-life depreciation — residual value, SLM vs WDV, component accounting, and the PPE schedule in the notes.
Read guide →Cash Flow Statement (AS-3): the indirect method
Prepare a Cash Flow Statement step by step — operating, investing and financing activities, reconciled to the Balance Sheet.
Read guide →Each guide states the position as at its last-updated date and cites the notification or announcement it rests on, so you can check it against the source.