You are the accountant of Zenith Industries Ltd., a company engaged in the manufacture and sale of consumer products across India. The company has…

Events occurring after the balance sheet date that represent material changes or commitments affecting the financial position of an enterprise must be disclosed in accordance with paragraph 15 of AS 4 on Contingencies and Events Occurring After the Balance Sheet Date. The treatment of each event is explained below: a. Fire Accident and Loss of Uninsured Stock: The key consideration is whether the impact of the loss is material. The fire occurred after the balance sheet date and does not relate to any condition existing as on 31st March, 2025. Therefore, it is a non-adjusting event. However, since the loss is material—not only due to the uninsured nature of the stock but also due to the company's exposure to future risk—the fact of the fire and the uninsured position must be disclosed in the financial statements. The disclosure should include the nature of the event, its estimated financial effect, and information regarding future vulnerabilities, if determinable. b. Legal Suit Filed Against the Company: The lawsuit was initiated after the balance sheet date and does not provide additional evidence of any condition that existed on 31st March, 2025. Therefore, it is also a non-adjusting event. In accordance with paragraph 16 of AS 4, this should be disclosed as a contingent liability. The disclosure should include the nature of the contingency, an estimate of the financial effect, and uncertainties that might affect the outcome of the case in future periods. c. Cheques in Hand: (i) Cheques collected by marketing personnel: These cheques were physically collected by the company's employees on or before 31st March, 2025. Since marketing personnel act as representatives of the company, the collection of cheques by them constitutes receipt by the company itself. The liability of the stockists is discharged upon handing over the cheques. Hence, such cheques represent an adjusting event as per AS (i) Accordingly, the cheques collected by marketing personnel should be adjusted in the books by reducing Trade Receivables and recognizing them as Cheques in Hand under Cash and Cash Equivalents. Proper disclosure in Notes to Accounts should also be made regarding the accounting policy followed for recognizing such cheques. (ii) Cheques sent by stockists through courier: Even if the cheques are dated 31st March or earlier, they were received by the company only after the balance sheet date. Hence, the event of their receipt does not represent any condition existing as on 31st March, 2025. Therefore, this is a non-adjusting event. Such cheques should be accounted for in the period in which they are actually received (i.e., April 2025), irrespective of their date. Further, since the event does not materially affect the company's financial position, no disclosure is necessary in the Director's Report or Notes to Accounts.