D. K. Goel solutions for Accountancy Volume 1 and 2 [English] Class 12 ISC chapter 9 - Financial Statements of Companies [Latest edition]

Name the major headings under which the equity & liabilities sides of a company’s balance sheet are organised and presented.

Name the major headings under which the assets sides of a company’s balance sheet are organised and presented.

Prepare a layout of information required to be given under the heading ‘Share capital’ on the equity & liabilities side of a company’s balance sheet.

What items are required to be included under the heading “Current Assets”?

What items are required to be included under the heading “Current Liabilities”?

What is a Contingent liability?

Give one example of contingent liability?

List two items under the heading ‘Non-Current Liabilities’ in a Balance sheet prepared as per schedule III of the Companies Act.

List two items under the heading ‘Non-Current Assets’ in a Balance Sheet prepared as per schedule III of the Companies Act.

When drafting a company’s balance sheet under Schedule III Part I, under which heading and sub-heading will calls in arrear and calls in advance appear?

Answer in one sentence only.

Give two examples of intangible assets.

Give four examples of Property, Plant and Equipment as per Schedule III, Part I of the Companies Act, 2013.

What are fictitious assets?

Give one example of fictitious assets.

What is divisible profit?

What are trade investments?

What is meant by an operating cycle?

Mention whether the following Trade Payable is current liability or non current liability:

Mention whether the following Trade Payable is current liability or non current liability:

Under which heads and sub-heads will the following items appear in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013:

1. Public Deposits
2. Building under construction
3. Calls in Advance
4. Calls in Arrears

Distinguish between a Company’s Balance Sheet and Firm’s Balance Sheet.

Distinguish between General Reserve and Reserve Fund.

List any four items that are shown under the sub-head ‘Other Current Assets’ in the balance sheet of a company prepared as per Schedule III of the Companies Act, 2013.

The books of accounts of Zebra Ltd. showed:

• Change in inventories of raw materials (₹ 70,000).
• Opening inventory of ₹ 2,40,000.

You are required to give the formula used by the company to calculate the change in inventories.

What is a share warrant?

Mention the head under which Money received against Share Warrants is shown in the Balance Sheet of a company prepared as per Schedule III of the Companies Act, 2013.

The Annual Report of ITC Ltd., for the financial year 2021-22, showed Claims against the Company not acknowledged as debts of ₹880.58 crores including Third party claims arising from disputes relating to contracts aggregating ₹29.22 crores.

Mention the heading and the sub-heading under which this item would, have been shown in the Notes to Accounts accompanying the Balance Sheet of ITC Ltd. as at 31st March, 2022.

On 1st April, 2022 X Ltd. has a debit balance of ₹ 3,00,000 in Reserves and Surplus as Balance of Statement of Profit & Loss. It earned a profit of ₹ 5,00,000 for the year ended 31st March, 2023. How would you show these items in the Balance Sheet and notes to accounts?

Y Ltd. has the following balances on 1st April, 2022:

During the year ended 31st March, 2023, it incurred a loss of ₹ 2,60,000. How would you show these items in the Balance Sheet and notes to accounts?

Z Ltd. has the following balances on 1st April, 2022:

During the year ended 31st March, 2023, it incurred a loss of ₹ 7,10,000. Show how these items will appear in the Balance Sheet and notes to accounts?

Axis Ltd. has the following balances on 1st April, 2022:

It earned a profit of ₹ 6,00,000 for the year ended 31st March, 2023. It decided to transfer ₹ 3,00,000 towards General Reserve and ₹ 2,50,000 towards Debenture Redemption Reserve.

Directors proposed a final dividend of ₹ 80,000.

Show how these items will appear in the Balance Sheet and notes to accounts.

Operating Cycle and the period when payment is made is given below. How will you classify the liability?

Operating Cycle and the period when payment is received is given below. How will you classify the asset?

State the major heads under which the items appearing on the equity and liabilities side of a company's Balance Sheet are classified.

State the major heads under which the items appearing on the assets side of a company's Balance Sheet are classified.

How will you classify the following in a Company’s Balance Sheet?

1. Reserve and Surplus
2. Money received against share warrants

Name the Sub-headings under which Current Liabilities shall be classified in a Company's Balance Sheet.

Name the sub-headings under which Current Assets shall be classified in a Company's Balance Sheet.

Under what heads will you classify the following items on the equity & liability side of the Balance Sheet of a limited company:

1. Unclaimed Dividend
2. Proposed Dividend
3. Securities Premium
4. Share Forfeited Account
5. Public Deposits
6. Debentures issued by the Company.

Under what major heads the following items on the Assets side of the Balance Sheet of a Company will be presented:

1. Marketable Securities
2. Loose Tools
3. Live Stock
4. Goods in Transit
5. Prepaid Expenses

How would you disclose the following items in the Balance Sheet of a Limited Company?

1. Outstanding Salary
2. Bank Deposits with maturity period of 12 months
3. Unpaid matured deposits
4. Preliminary Expenses
5. Bills Payable

Under what heads the following items are shown in the Balance Sheet of a Company?

1. Patents and Trade Marks
2. Income Received in Advance
3. Debentures issued by the Company
4. Stores and Spare-parts
5. Motor Vehicles
6. Government Securities
7. Uncalled Liability on partly paid shares

Under what heads the following are recorded in a Company’s Balance Sheet?

1. Computer Software
2. Bills Receivable
3. Interest Accrued and Due on Debentures
4. Interest Accrued on Investments
5. Calls in Advance

Under what heading will you show the following item in the Balance Sheet of a Company:

Credit Balance of Statement of Profit & Loss

Under what heading will you show the following item in the Balance Sheet of a Company:

Provision for employees earned leave payable on retirement.

Under what heading will you show the following item in the Balance Sheet of a Company:

Provision for Provident Fund Scheme

Under what heading will you show the following item in the Balance Sheet of a Company:

Provision for Employee Benefits (to be settled within 12 months)

Under what heading will you show the following item in the Balance Sheet of a Company:

Provision for Doubtful Debts

Under what heading will you show the following item in the Balance Sheet of a Company:

Contracts remaining to be executed

How will you show the following item in the Balance Sheet of a Company:

Stores and Spares

How will you show the following item in the Balance Sheet of a Company:

Debentures due for Redemption

How will you show the following item in the Balance Sheet of a Company:

Live Stock

How will you show the following item in the Balance Sheet of a Company:

Licences and franchise

How will you show the following item in the Balance Sheet of a Company:

Advance from Customers

How will you show the following item in the Balance Sheet of a Company:

Advance to Suppliers

How will you show the following item in the Balance Sheet of a Company:

Commision Received in Advance

The following balances have been extracted from the books of Robin Ltd. as on 31st March, 2024:

Prepare the Balance Sheet of the company as per Schedule III, Part I of the Companies Act, 2013.

X Ltd. carried forward balance of ₹ 20,50,000 as surplus for the year ended on 31st March, 2023. During the year 2023-24 it made a profit of ₹ 71,80,000 before making provision for income tax. Provision for income tax is to be made for ₹ 30,00,000. Following appropriations were proposed by the Directors:

1. Transfer ₹ 5,00,000 to the Dividend Equalisation Reserve.
2. Pay the year’s dividend on ₹ 5,00,000 10% cumulative Preference share capital.
3. Pay 20% dividend on ₹ 60,00,000 Equity share capital.
4. Pay ₹ 1,00,000 dividend to non-cumulative Preference Shares.
5. Transfer ₹ 7,50,000 to Debenture Redemption Fund.
6. Transfer 7.5% of Current year’s net profit to General Reserve.

Ascertain the net amount of ‘Surplus’.

The following balances are left on the books of HMM Ltd. after its Profit and Loss Statement had been prepared for the year ended 31st March, 2024:

You are required to draw up the company’s Balance Sheet as at 31st March, 2024 after taking into account the following matters:

1. Transfer ₹ 1,00,000 to General Reserve.
2. Directors proposed a dividend of 12% on the paid up share capital.

The following are the balances of Ashok Photo Company Ltd., as at 31st March, 2024.

Informations:

1. The authorised Capital of the Company is divided into 50,000 shares of ₹ 10 each.
2. Directors decided to transfer ₹ 38,000 to General Reserve.top
3. Directors proposed a dividend of 12% on share capital.

Prepare the Balance Sheet of the Company as at 31st March, 2024 along with ‘Notes to Accounts’.

The authorised capital of Avery Ltd. is ₹ 70,00,000 divided into 5,00,000 equity shares of ₹ 10 each and 2,00,000, 10% preference shares of ₹ 10 each. All the shares were issued and fully paid up. On 1st April, 2021 the company had a balance of profit ₹ 2,00,000 brought forward from the previous year. The net profit of the company for the year ended 31st March, 2022 amounted to ₹ 9,00,000.

The director’s proposed to:

1. transfer ₹ 1,00,000 to General Reserve;
2. pay the dividend of 12% on equity shares;
3. pay the year’s dividend on preference shares;
4. carry forward the remaining balance.

You are required to show how the items would appear in the Balance Sheet of the Company and prepare ‘Notes to Accounts’.

Pinnacle Instruments Ltd. registered itself with a capital of ₹ 20,00,000 divided into Equity Shares of ₹ 100 each.
On 1st June, 2014, the company issued 5,000 Equity Shares as fully paid to Mila Herbals, as purchase consideration for the purchase of plant and machinery.
The remaining shares were issued to the public at par.
Till the date of the Balance Sheet, the Directors had called from the public, 60% of the nominal value of the shares.
The amount called was received by the company.

You are required to prepare as at 31st March, 2015:

1. The Balance Sheet of Pinnacle Instruments Ltd. as per Schedule III of the Companies Act, 2013.
2. Notes to Accounts.

The following balances have been extracted from the books of Vanity Ltd. as at 31st March, 2017:

You are required to prepare as at 31st March, 2017:

1. The Balance Sheet of Vanity Ltd. as per Schedule III of the Companies Act, 2013.
2. Notes to Accounts.

Xylo Ltd. was formed on 1^st April, 2017, with an authorized capital of ₹ 12,00,000 divided into Equity Shares of ₹ 10 each. It issued a prospectus inviting applications for 30,000 shares to be issued at par. The issue was fully subscribed and the amount due on the shares was received by the company.

On 1^st April, 2018, the company issued another 60,000 shares at a premium of ₹ 2 per share to be received with allotment. Applications for 55,000 shares were received which were duly allotted.

All the amounts due on these shares were received except the final call ₹ 2 per share on 1,000 shares.

On 1^st October, 2018, the company also issued 2,000 6% debentures of ₹ 100 each at par, to be redeemed at par in five equal annual instalments beginning from 1^st October, 2019. The entire issue price of these debentures was received by the company with application.

Half yearly interest on the debentures of ₹ 6,000 was paid by the company to the debenture holders on 31^st March, 2019.

You are required to show the relevant items under:

1. Equity and Liabilities in the Balance Sheet of the Company as at 31^st March, 2019 (prepared as per Schedule III of the Companies Act, 2013).
2. Notes to Accounts.

The following balances have been extracted from the books of Meadow Ltd. as at 31^st March, 2023.

Additional Information:

• The company had issued 1,25,000 Equity shares of ₹ 10 each which were all applied for and allotted to the public. These shares were fully called up by the company.
• There were calls-in arrears @ ₹ 2 per share on 15,000 shares out of which 5,000 shares were forfeited by the company.

You are required to:

1. Show the Share Capital in the Notes to Accounts.
2. Give the amount for each of the following:
   1. Short-term borrowings
   2. Current Assets
   3. Property, Plant and Equipment and Intangible Assets
      1. Property, Plant and Equipment

The Balance Sheet provides information about financial position of an enterprise ______.

Balance sheet of a company is required to be prepared in the format given in ______.

As per Companies Act, the Balance Sheet of a company is required to be presented in ______.

Which of the following is not required to be prepared under the Companies Act?

According to prescribed order of assets in a Company’s Balance Sheet ______ assets should be shown first of all.

In a Company’s Balance Sheet ______ appear under the head ‘non-current assets’.

Calls in arrears appear in a Company’s balance sheet under ______.

Calls in advance appear in a Company’s Balance Sheet under ______.

Short-term borrowings appear in a Company’s balance sheet under the head ______.

Public deposits appear in a Company’s balance sheet under ______.

Goodwill appears in a Company’s Balance Sheet under the head ______.

‘Loose Tools’ appear in the company’s Balance Sheet under the head/sub-head ______.

Share forfeiture account appears in a company’s balance sheet under the sub-head ______.

Current maturities of long-term debts appears in a company’s balance sheet under ______.

Securities premium appears in a company’s balance sheet under ______.

Prepaid expenses appear in a company’s balance sheet under the sub-head ______.

______ appear in a company’s balance sheet under the sub-head short-term provision.

Provision for tax appears in a company’s balance sheet under the sub-head ______.

Bills receivables appear in a company’s balance sheet under the sub-head ______.

Trade investments appear in a company’s balance sheet under the sub-head ______.

‘Claims against the company not acknowledged as debts’ is shown under the head ______.

Unclaimed dividend appears in a company’s balance sheet under the sub-head ______.

Interest accrued and due on debentures appear in a company’s balance sheet under the sub-head ______.

Interest accrued but not due on loans appear in a company’s balance sheet under the sub-head ______.

6% Debentures appear in a company’s balance sheet under the sub-head ______.

Interest accrued on investments appear in a company’s balance sheet under the sub-head ______.

‘Accumulated dividend arrears’ on preference shares is shown in the company’s balance sheet as ______.

50,000, 9% Debentures redeemable within 12 months of the date of balance sheet will be shown under ______.

Which one of the following is Commitment?

Which of the following items is shown under the head ‘Current Assets’ while preparing the Balance Sheet of a company?

While preparing the Balance Sheet of a company Mastheads and Publishing Titles are shown under which head?

Which of the following items is shown under the head 'Current Liabilities' while preparing the Balance Sheet of a company?

While preparing the Balance Sheet of a company ‘Securities Premium’ is shown under:

Which of the following items is shown under the head ‘Non-Current Assets’ while preparing the Balance Sheet of a company?

Under which heading the item ‘Bills Discounted but not yet matured’ will be shown in the Balance Sheet of a company?

Which one of the following items is shown under the heading ‘current liabilities’ in the Balance Sheet of a company?

While preparing the Balance Sheet of a Company which item is shown under the head ‘Long term Borrowings’?

Share capital of a company consists of 5,00,000 Shares of ₹ 10 each, ₹ 8 called up. All the shareholders have duly paid the called up amount. Share capital will be shown as ______.

A company has issued 2,00,000 equity shares of ₹ 10 each and it has called the entire nominal value of the share. It has received the entire amount except final call of ₹ 3 per share on 5,000 shares. Subscribed capital will be shown as follows:

Change in inventories means ______.

Which of the following is not a sub-head under the current assets?

‘Security deposits’ are presented in the balance sheet of the company under the sub-head ______.

Which of the following is not a part of Finance Cost (in Statement of Profit and Loss)?

If the operating cycle of a company cannot be identified, it is assumed to be ______.

A company has an operating cycle of eight months. It has accounts receivables amounting to ₹ 1,00,000 out of which ₹ 60,000 have a maturity period of 11 months. How would this information be presented in the balance sheet?

Which of the following is correct sequence to be shown under sub-heading ‘Reserve and Surplus’ to be shown in the balance sheet:

Match the following:

Choose the correct option:

Match the items given in Column I with the headings/subheadings (Balance sheet) as defined in Schedule III of Companies Act 2013.

Choose the correct option:

Match the items given in Column I with the headings/sub-headings of the Balance Sheet as per Schedule III Part I of the Companies Act, 2013, given in Column II:

Match the items given in Column I with the correct heading/sub-heading given in Column II.

Ajanta Ltd. issued 10% Debentures of ₹ 8,00,000 on 1st April, 2019 which are redeemable in five equal yearly instalments starting from 1st April, 2022. How would this information be presented in the Balance Sheet as at 31st March, 2021.

Match the items given in Column I with the headings/sub-headings of Column II under which these are shown according to Schedule III Part I of the Companies Act, 2013:

Financial statements are prepared on certain basic assumptions (pre-requisites) known as ______.

Operating cycle is the time between the acquisition of assets for processing and their realisation into ______.

Assertion (A): Balance Sheet of a Company is prepared on a particular date.

Reason (R): Statement of Profit and Loss of a Company is prepared for a particular period.

In the context of the above two statements, which of the following is correct?

Assertion (A): A Company’s Balance Sheet is prepared on a particular date and not for a particular period.

Reason (R): A Balance Sheet is true only for the date on which it is prepared because even a single transaction would cause a change in assets and liabilities.

In the context of the above two statements, which of the following is correct?

Assertion (A): Balance Sheet of a Company is prepared according to the going concern concept.

Reason (R): Balance Sheet of a Company is based on absolute facts but is influenced by personal judgements.

In the context of the above two statements, which of the following is correct?

Assertion (A): Balance Sheet and Statement of Profit and Loss show the line items only i.e. one amount against each item and details of that item shall be given in Notes to Accounts.

Reason (R): This has been prescribed for easy understanding of the financial statements.

In the context of the above two statements, which of the following is correct?

Assertion (A): Financial Statements are the end products of accounting process.

Reason (R): Financial Statements of a Company refer to Statement of Profit and Loss and a Balance Sheet.

In the context of the above two statements, which of the following is correct?

Assertion (A): Balance Sheet of a Company is prepared under two broad heads i.e. (i) Equity & Liabilities and (ii) Assets.

Reason (R): In a Company's Balance Sheet, Equity & Liabilities are shown in first part and Assets in the second part.

In the context of the above two statements, which of the following is correct?

Assertion (A): Negative Balance of Statement of Profit and Loss is shown in Notes to Accounts under the sub-head ‘Reserve and Surplus’.

Reason (R): As per Companies Act, whether the balance in Statement of Profit and Loss is positive or negative, it is to be shown under ‘Reserve and Surplus’.

In the context of the above two statements, which of the following is correct?

Assertion (A): Interest accrued and due is shown under ‘Other Current Liabilities’ whereas Interest accrued but not due is shown under ‘Short-term Provisions’.

Reason (R): Since both interest accrued and due and interest accrued but not due are payable within 12 months from the date of Balance Sheet, they are shown under ‘Other Current Liabilities’.

In the context of the above two statements, which of the following is correct?

Assertion (A): Operating Cycle is the time between the acquisition of assets for processing and their realisation in Cash.

Reason (R): In case operating cycle cannot be identified, it is assumed to have a duration of twelve months.

In the context of the above two statements, which of the following is correct?

Assertion (A): If the operating cycle of a business is 18 months, goods sold on credit period of 15 months will be classified as current assets.

Reason (R): An asset shall be classified as current asset if the period of the operating cycle of the business is of a period of more than 12 months.

In the context of the above two statements, which of the following is correct?

Assertion (A): Proposed Dividend for current year is shown under ‘Other Current Liabilities’.

Reason (R): Unclaimed Dividend is shown under ‘Other Current Liabilities’.

In the context of the above two statements, which of the following is correct?

Assertion (A): Computer in a Company's Balance Sheet is shown under sub-head ‘Property, Plant and Equipment’.

Reason (R): Computer Software in a Company's Balance Sheet is shown under sub-head ‘Intangible Assets’.

In the context of the above two statements, which of the following is correct?

Assertion (A): Reserves are created to strengthen the financial position of the company.

Reason (R): Provision is created to provide for any known liability whose amount as yet is uncertain.

In the context of the above two statements, which of the following is correct?

Assertion (A): Bank Overdraft is shown under ‘Short term borrowings’ in a Company's Balance Sheet.

Reason (R): Current Year's Provision for tax is shown under ‘Other Current Liabilities’ in a Company's Balance Sheet.

In the context of the above two statements, which of the following is correct?

Assertion (A): Trade Receivables are shown below the Inventories in a Company's Balance Sheet.

Reason (R): Assets and Liabilities are shown in the order of permanence in a Company's Balance Sheet.

In the context of the above two statements, which of the following is conect?