Financial Statements of a Company Test 14

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Financial Statements of a Company Test 14

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Question 1
1 / -0

Divisible profit excludes _____________.

A
capital reserve

B
dividend equalization fund

C
profit and loss account

D
general reserve

Solution

Divisible profit is the profit or that part of the profit which can be freely distributed as dividends to the shareholders. Dividend equalisation reserve, profit and loss account and general reserves are all free reserves which can be legally used to declare dividends, Capital reserve is not a divisible profit as it is created to meet any capital expenditure or it is a reserve created out of capital profits. Hence, Capital reserve is not a divisible profit.
Question 2
1 / -0

Which of the following statement is true?

A
Profit prior to incorporation is a capital profit

B
Shares of private company are freely transfereable

C
Shares cannot be issued at a premium more than $$20$$%

D
Balance in Share Forfeited A/c is transferred to Goodwill A/c

Solution

1)True. When a running business is taken over the period before commencement is known as prior period and any profit made during the period is capital profit because that profit is earned before the company came into existence.
2)False. Shares of private company are not freely transferable. Only a public company can transfer shares freely.
3) False. There is no limitation on what is the maximum premium on shares.
4) False. Balance of share forfeited account are transferred to capital reserve account.
Question 3
1 / -0

The useful life specified in Part C of Schedule II of the Companies Act, $$2013$$ for furniture and fittings used in hotels, restaurant, school, colleges etc is _____ years.

A
$$15$$

B
$$10$$

C
$$3$$

D
$$8$$

Solution

Schedule II of Companies Act, 2013 specified different useful life for different types of assets as per its nature. Furniture and fittings has been divided into two categories as mentioned below:
(i) General furniture and fittings: 10 years

(ii) Furniture and fittings used in or furniture and fittings used in hotels, restaurant, school, colleges etc.: 8 years
Question 4
1 / -0

Continuous process plant means ______.

A
plant which is required or designed to operate for $$24$$ hours a day

B
plant which is required or designed to operate for $$18$$ hours a day

C
plant which can be used for at least $$18$$ hours a day

D
plant which is required or designed to operate at least $$24$$ hours continuously
Solution
- Companies Act, 2013 specified useful life to compute depreciation under schedule II in part A, part B and part C for assets.
- As specified in schedule II of companies act 2013, Continuous process plant means a plant which is required and designed to operate for twenty-four hours a day.
Question 5
1 / -0

The useful life specified in Part C of Schedule II of the Companies Act, $$2013$$ is for ____________.

A
whole of the asset

B
part of the asset

C
major part of the asset

D
for minor part of the asset
Solution
- Companies Act, 2013 specified useful life to compute depreciation under schedule II in part A, part B and part C for assets.
- As per notes of schedule II, Useful life specified in Part C of the Schedule is for whole of the asset. Where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately.
Question 6
1 / -0

The useful life specified in Part C of Schedule II of the companies act, $$2013$$ for office equipment is ______ years.

A
$$15$$

B
$$8$$

C
$$10$$

D
$$5$$

Solution

Schedule II of Companies Act, 2013 specified different useful life for different types of assets as per its nature wherein under part C useful life for office equipment specified as 5 years.
Question 7
1 / -0

The useful life specified in Part C of Schedule II of the Companies Act, $$2013$$ for electrical installations and equipment is ______ years.

A
$$15$$

B
$$8$$

C
$$10$$

D
$$5$$

Solution

Schedule II of Companies Act, 2013 specified different useful life for different types of assets as per its nature for calculating depreciation wherein under part C useful life for Electrical Installations and Equipment specified as 10 years.
Question 8
1 / -0

The useful life specified in Part C of Schedule II of the Companies Act, $$2013$$ for aircraft and helicopters is ____ years.

A
$$15$$

B
$$8$$

C
$$19$$

D
$$20$$

Solution

Schedule II of Companies Act, 2013 specified different useful life for different types of assets as per its nature for calculating depreciation wherein under part C useful life for aircraft and helicopters specified as 20 years.
Question 9
1 / -0

The books of account of a company are required to be preserved for at least _________.

A
$$6$$ years

B
$$8$$ years

C
$$10$$ years

D
$$9$$ years

Solution

As per section 128(5) of companies act, 2013 requires every company to preserve its books of accounts, together with vouchers relevant to any entry in such books for a period of not less than eight years immediately preceding the relevant financial year and if a company incorporated less than eight years then for the entire period. In the case of investigation the Central Government may direct that the books of account may be kept for such period longer than 8 years, as it may deem fit and give directions to that effect.
Question 10
1 / -0

Contingent liabilities are shown ________.

A
By way of note to balance sheet

B
In current liability

C
In non-current liability

D
In profit and loss A/c

Solution

A contingent liability are shown by way of a note to balance sheet. Contingent liability are the liabilities which may or may not arise in the near future, its shown as a foot note because of the full disclosure convention.

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Financial Statements of a Company Test 14

Result

Financial Statements of a Company Test 14

Score

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Rank

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SHARING IS CARING

Question 1

capital reserve

dividend equalization fund

profit and loss account

general reserve

Solution

Question 2

Profit prior to incorporation is a capital profit

Shares of private company are freely transfereable

Shares cannot be issued at a premium more than $$20$$%

Balance in Share Forfeited A/c is transferred to Goodwill A/c

Solution

Question 3

$$15$$

$$10$$

$$3$$

$$8$$

Solution

Question 4

plant which is required or designed to operate for $$24$$ hours a day

plant which is required or designed to operate for $$18$$ hours a day

plant which can be used for at least $$18$$ hours a day

plant which is required or designed to operate at least $$24$$ hours continuously

Solution

Question 5

whole of the asset

part of the asset

major part of the asset

for minor part of the asset

Solution

Question 6

$$15$$

$$8$$

$$10$$

$$5$$

Solution

Question 7

$$15$$

$$8$$

$$10$$

$$5$$

Solution

Question 8

$$15$$

$$8$$

$$19$$

$$20$$

Solution

Question 9

$$6$$ years

$$8$$ years

$$10$$ years

$$9$$ years

Solution

Question 10

By way of note to balance sheet

In current liability

In non-current liability

In profit and loss A/c

Solution

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