Financial Statements of a Company quiz

The format of a company's Balance Sheet is prescribed in:

Securities premium is shown under:

Loose tools are shown under:

Bank overdraft is shown under:

Unpaid dividend is shown under:

Goodwill is classified as:

Interest accrued but not due on debentures is shown under:

Which of the following is NOT a component of financial statements under the Companies Act, 2013?

Capital work-in-progress is shown under:

Debentures redeemable within twelve months of the Balance Sheet date are shown under:

State two objectives of preparing financial statements. (2 marks)

Name the major headings on the Assets side of a company's Balance Sheet. (2 marks)

Distinguish between a provision and a reserve. (2 marks)

Under which heads and sub-heads will the following be shown: (i) mining rights (ii) stores and spares? (2 marks)

What is share application money pending allotment? Where is it shown? (2 marks)

Explain why financial statements are said to be historical documents. (2 marks)

State the treatment of proposed dividend in the financial statements of a company. (2 marks)

Under which heads will the following be shown: (i) calls in arrears (ii) premium on redemption of debentures payable? (2 marks)

Give two items shown under Finance Costs in the Statement of Profit and Loss. (2 marks)

Why are expenses classified by nature in the Statement of Profit and Loss? (2 marks)

Calculate the total of current assets: inventories Rs 2,00,000; trade receivables Rs 1,50,000; cash at bank Rs 80,000; prepaid expenses Rs 10,000; 6-month fixed deposit Rs 50,000; long-term investments Rs 1,00,000. (3 marks)

Revenue from operations Rs 30,00,000; other income Rs 1,00,000; total expenses Rs 25,00,000; tax rate 25%. Calculate profit before tax, tax expense and profit for the period. (3 marks)

Equity share capital is Rs 20,00,000, of which calls in arrears are Rs 30,000. General reserve is Rs 3,00,000 and the Statement of Profit and Loss shows a debit balance of Rs 1,20,000. Calculate the total shareholders' funds. (3 marks)

A company's employee benefit expenses include salaries Rs 6,00,000, contribution to provident fund Rs 72,000 and staff welfare expenses Rs 28,000. Finance costs include interest on debentures Rs 90,000 and bank charges Rs 5,000. Calculate the totals for each head and explain where bank charges should be shown. (3 marks)

Machinery cost Rs 10,00,000 with accumulated depreciation of Rs 3,50,000; vehicles cost Rs 4,00,000 with accumulated depreciation of Rs 1,20,000; land Rs 6,00,000. Calculate the net book value of Property, Plant and Equipment to be shown in the Balance Sheet. (3 marks)

Read the passage and answer the questions. Sigma Ltd, a garment exporter, prepared its Balance Sheet as at 31 March 2026. The accountant included a long-term loan of Rs 5,00,000 from SBI, of which Rs 1,00,000 is repayable by December 2026, entirely under Long-term Borrowings. He also showed a 3-month bank deposit of Rs 40,000 under Non-current Investments. (i) Point out the errors in the treatment of the loan. (ii) Point out the error in the treatment of the deposit. (iii) Show the correct presentation of both items. (5 marks)

Read the passage and answer the questions. A shipbuilding company takes about 30 months from receiving an order to delivering the ship. Its finished but unsold ships and partly built ships are large in value. The company's auditor asks whether these can be shown as current assets. (i) What is the operating cycle of this company? (ii) Can work-in-progress be shown as current assets? Justify with reference to Schedule III. (iii) Name two other items whose classification depends on the operating cycle. (5 marks)

Read the passage and answer the questions. Arora Industries Ltd reported the following for 2025-26: revenue from operations Rs 40,00,000; cost of materials consumed Rs 18,00,000; purchases of stock-in-trade Rs 4,00,000; change in inventories of finished goods (decrease) Rs 1,00,000; employee benefit expenses Rs 6,00,000; finance costs Rs 80,000; depreciation Rs 2,20,000; other expenses Rs 3,00,000. (i) Calculate total expenses. (ii) Calculate profit before tax. (iii) Calculate profit after tax at a tax rate of 30%. (5 marks)

Read the passage and answer the questions. A retired teacher wants to invest in shares of a pharmaceutical company. She studies its financial statements but is told that they do not show the value of the company's skilled scientists, the effect of inflation on assets, or the company's market reputation. (i) Which limitation of financial statements is shown by the absence of the value of scientists? (ii) How does inflation make the statements less reliable? (iii) Suggest two other sources of information she should study. (5 marks)

Read the passage and answer the questions. Meridian Ltd has the following balances: provision for tax Rs 1,20,000; provision for warranty claims (expected over three years) Rs 60,000; outstanding salaries Rs 45,000; trade payables Rs 2,40,000; bills payable Rs 30,000. (i) Which items will be shown under Short-term Provisions? (ii) Which items will be shown under Long-term Provisions? (iii) Calculate the total of Trade Payables and Other Current Liabilities. (5 marks)

Draw the complete format of a company's Balance Sheet as per Schedule III. Explain any four sub-heads with two examples of items shown under each. (6 marks)

Prepare a Balance Sheet in prose line form with Notes to Accounts from: equity share capital Rs 15,00,000; general reserve Rs 2,00,000; surplus in Statement of Profit and Loss Rs 1,00,000; 10% debentures Rs 5,00,000; trade payables Rs 1,50,000; outstanding expenses Rs 50,000; land and building Rs 12,00,000; plant Rs 6,00,000; inventories Rs 2,50,000; trade receivables Rs 3,00,000; cash at bank Rs 1,50,000. Verify that both sides agree. (6 marks)

Explain the nature of financial statements as a combination of recorded facts, accounting conventions, postulates and personal judgements. Draw a chart showing these four elements with one example of each. (6 marks)

Draw the format of the Statement of Profit and Loss as per Schedule III. Explain each expense head with two examples, and show how changes in inventories of finished goods and work-in-progress are calculated. (6 marks)

Discuss the uses of financial statements to six groups of users. Draw a wheel diagram placing the company at the centre and showing the information needs of each user group. (6 marks)