Question

Under the Companies Act, 2013, the financial statement may not include the cash flow statement with respect to: -
(i) One person company.
(ii) Small company.
(iii) Dormant company.
(iv) Shell company.

• A. Only (i), (ii), and (iii)
• B. Only (ii), (iii), and (iv)
• C. Only (i), (ii), and (iv)
• D. Only (i), (iii), and (iv)

Hint:

The exemption of the cash flow statement reduces compliance costs for small and closely held entities like OPCs and Small Companies.

Answer 1

The Correct Option is A

Step 1: Understanding the Question:
The question asks which types of companies are exempted from preparing and including a cash flow statement in their annual financial statements under the Companies Act, 2013.

Step 2: Detailed Explanation:

• Section 2(40) Proviso: The proviso to Section 2(40) of the Companies Act, 2013, grants an exemption regarding cash flow statements to specific categories of companies.

• Exempted Companies: According to the Act, the financial statement of the following companies may not include the cash flow statement:
1. One Person Company (OPC): Defined under Section 2(62).
2. Small Company: Defined under Section 2(85).
3. Dormant Company: Defined under Section 455.
4. Private companies that are start-ups (added by amendment).

• Shell Company: "Shell company" is not a legally defined category under the Companies Act, 2013, and is not granted any such exemption.

Step 3: Final Answer:
Only (i) One person company, (ii) Small company, and (iii) Dormant company are exempt. This corresponds to Option A.