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प्रश्न
Financial Statements are prepared following the constituent accounting concepts principles procedures and also the legal environment in which the business organisation operate. These statements are the source of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions in a meaningful way.
From the above statements identify any two values that a company should observe while preparing its financial statements. Also, State under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act 2013
(1) Capital Reserve
(2) Calls-in-Advance
(3) Loose Tools
(4) Bank overdraft
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उत्तर
The values that must be observed by a company while preparing its financial statements are
1)these statements must be drawn following the defined accounting concepts, principles and methods, and
2) the financial statements should be drawn following the legal framework of the country of operations.
| Items | Major Head | Sub – Head |
| Capital Reserve | Shareholder’s Fund | Reserve & Surplus |
| Calls – in - Advance | Current Liabilities | Other Current Liabilities |
| Loose Tools | Current Assets | Inventories |
| Bank Overdraft | Current Liabilities | Short-term Borrowings |
Proprietary Ratio of M Ltd. 0.80: 1
Proprietary Ratio = `"Proprietor's Funds"/"Total Assets"`
| Transactions | Effects |
| Obtained a loan from bank Rs 2,00,000 payable after 5 years |
Decrease, The total assets would increase with the amount of loan raised and proprietor’s funds remains the same |
| Purchased machinery for cash Rs 75,000 | No Change, Total Assets will increase and decrease by the same amount |
| Redeemed 5% Redeemable preference shares Rs 1,00,000 |
Decrease, Proprietor’s Funds and Total Assets both will decrease by the same amount but the percentage change would be more on Proprietor’s Fund already in ratio 0.80: 1 |
| Issued equity shares to vendors of machinery purchased for Rs 4,00,000 | Increase, Even though both Proprietor’s Funds and Total Assets both will increase by the same amount but the percentage change would be more in Proprietor’s Fund |
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संबंधित प्रश्न
State the objectives of 'Analysis of Financial Statements'.
'Good Blankets Ltd.' are the manufacturers of woollen blankets. Blankets of the company are exported to many countries. The company decided to distribute blankets free of cost to five villages of Kashmir Valley destroyed by the recent floods. It also decided to employ 100 young persons from these villages in their newly established factory at Solan in Himachal Pradesh. To meet the requirements of funds for starting its new factory, the company issued 50,000 equity shares of Rs 10 each and 2,000 8% debentures of Rs 100 each to the vendors of machinery purchased for Rs 7,00,000. Pass necessary journal entries for the above transactions in the books of the company. Also, identify anyone value which the company wants to communicate to the society.
State any one limitation of Financial Statement Analysis’
What is meant by 'Analysis of Financial Statements'? State any two objectives of such an analysis.
Financial statements are prepared following the consistent accounting concepts, principles, procedures and also the legal environment in which the business organizations operate. These statements are the sources of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions in a meaningful way.
From the above statement identify any two values that a company should observe while preparing its financial statements. Also state under which major headings and sub-headings the following items will be presented in the balance sheet of a company as per Schedule III of the Companies Act 2013.
General Reserves, short term loans and advances, Capital work in progress and desgin.
Financial statements are prepared following the consistent accounting concepts, principles, procedures and also the legal environment in which the business organisations operate. These statements are the source of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions.
From the above statement identify any two values that a company should observe while preparing its financial statements. Also, state under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013:
(i) Calls-in-arrears
(ii) Calls-in-advance
(iii) Gain on reissue of forfeited equity shares
(iv) Trade payables to be settled beyond 12 months from the date of Balance Sheet
State the interest of tax authorities in the analysis of financial statements.
Name any two financial statements prepared by a not-for-profit organisation.
Long Answer Question
Prepare the format of balance sheet and explain the various elements of balance sheet.
List any five items that are shown under Reserves and Surplus.
State giving reason whether Trade Receivables are classified as Current Assets or Non-current Assets in the Balance Sheet of a Company as per Schedule III of the Companies Act, 2013 in the following cases.
| Case | Operating cycle Period (months) | Expected realization period (months) |
| 1 | 10 | 11 |
| 2 | 10 | 12 |
| 3 | 10 | 13 |
| 4 | 14 | 13 |
| 5 | 15 | 16 |
State giving reason whether Trade Payables are classified as Current Liabilities or Non-current Liabilities in the Calance Sheet of a Company as per Schedule III of the Companies Act, 2013 in the following cases:
| Case |
Operating Cycle Period (Months) |
Expected Payment Period (Months |
||
| 1 |
10 |
11 |
||
| 2 |
10 |
12 |
||
| 3 | 10 | 13 | ||
| 4 | 14 | 13 | ||
| 5 |
15 |
16 |
||
State any two items that are included in the following major heads under which liabilities of a company are shown:
(i) Reserves and Surplus;
(ii) Long-term Borrowings;
(iii) Short-term Borrowings;
(iv) Other Current Liabilities.
From the following information, prepare Note to Accounts on Finance Costs: Interest paid to Bank ₹ 75,000; Interest on Debentures ₹ 58,000; Loss on issue of Debentures written off ₹ 27,500; and Commitment Charges ₹ 15,000.
From the following information of Best Marketing Ltd. for the year ended 31st March, 2019 prepare Note to Accounts on Depreciation and Amortisation Expenses:
Depreciation on: Building ₹ 15,500; Plant and Machinery ₹ 25,000; Computers ₹ 60,000; Goodwill written off ₹ 7,500; Patents written off ₹ 12,500.
State under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013:
(i) Capital Reserve;
(ii) Calls-in-Advance;
(iii) Loose Tools; and
(iv) Bank overdraft.
Choose the appropriate alternative from the given options:
Which of the following is a limitation of financial analysis?
The financial statements do not exhibit
‘Financial statements are prepared based on past data’. Explain how this is a limitation.
What are the objectives of preparing financial statements?
The Goodwill is not a ________.
___________ is conducted by bankers and government.
Which of the following statements are false?
- When all the comparative figures in a balance sheet are stated as percentage of the total, it is termed as horizontal analysis.
- When financial statements of several years are analysed, it is termed as vertical analysis.
- Vertical Analysis is also termed as time series analysis.
For income measurement ______ basis of accounting is followed.
Consider the following statements.
Statement 1 - "Facts and figures presented in financial statements are based on personal judgements"
Statement 2 - "Facts and figures presented in financial statements are not at all based on personal judgements"
Consider the following statements.
Statement 1 - "Going Concern concept assumes that the enterprise continues for a long period of time."
Statement 2 - "Going Concern concept assumes that the enterprise continues for a shorter period of time."
Provision of taxation is made by debiting which account?
What are the components of income statement?
Find out Cost of goods sold Opening stock = 1002, Purchases = 50,000, Wages = 5000, Manufacturing expenses = 20,000.
As per Schedule III, Part I of the Companies Act, 2013 'calls-in-arrears' will be presented under which of the following head/sub-head, in the Balance Sheet of a company?
Purchase of goods for reselling is shown in the Statement of Profit and Loss under ______.
| Nitya, Shreya and Ishita are partners in a firm. They share profits in the ratio of 5 : 3 : 2. Their fixed capitals are ₹ 1,80,000; ₹ 1,60,000 and ₹ 2,00,000 respectively. For the year ending 31st March, 2022, Nitya withdrew ₹ 7,500 at the end of every quarter. |
The partnership deed provided that interest on capital will be allowed @10% p.a. The amount of interest on Ishita's capital will be:
|
Rudra, Dev and Shiv were partners in a firm sharing profits in the ratio of 5 : 3 : 2. Their fixed capitals were ₹ 6,00,000, ₹ 4,00,000 and ₹ 2,00,000 respectively. Besides his capital Shiv had given a loan of ₹ 75,000 to the firm. Their partnership deed provided for the following:
During the year Rudra withdrew ₹ 50,000 at the end of each quarter; Dev withdrew ₹ 50,000 in the beginning of each half year and Shiv withdrew ₹ 70,000 at the end of each half year. The profit of the firm for the year ended 31-3-2022 before allowing interest on Shiv's loan was ₹ 7,06,750. |
How much amount of net profit will be transferred to Profit and Loss Appropriation A/c?
Richa and Anmol are partners sharing profits in the ratio of 3 : 2 with capitals of ₹ 2,50,000 and ₹ 1,50,000 respectively. Interest on capital is agreed @6% p.a. Anmol is to be allowed an annual salary of ₹ 12,500. During the year ended 31st March 2023, the profits of the year prior to calculation of interest on capital but after charging Anmol’s salary amounted to ₹ 62,000. A provision of 5% of this profit is to be made in respect of manager’s commission.
Following is their Profit & Loss Appropriation Account:
| Particulars | (₹) | Particulars | (₹) |
| To Interest on Capital | By Profit & loss account (After manager’s commission) | __(2)__ | |
| Richa | ______ | ||
| Anmol | ______ | ||
| To Anmol’s Salary A/c | 12,500 | ||
| To Profit transferred to: Richa’s Capital A/C (1) | __(1)__ | ||
| Anmol’s Capital A/c | ______ | ||
| ______ | ______ |
The amount to be reflected in blank (1) will be:
