Financial Statements of a Company Test 20

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Financial Statements of a Company Test 20

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Weekly Quiz Competition

Question 1
1 / -0

Patent is shown under __________________.

A
Assets side under intangle Assets

B
Assets side under current assets

C
Liabilities side under current liability

D
Liabilities side under reserves

E
None of the above

Solution

A patent is considered an intangible asset.
This is because a patent does not have physical substance, and provides long-term value to the owning entity. As such, the accounting for a patent is the same as for any other intangible fixed asset such as goodwill, trademarks, etc.
Question 2
1 / -0

If an inflow of economic benefits is probable then contingent asset is disclosed ______________ .

A
In the financial statements

B
In the report of the approving authority(Board of Directors in the Case of a company, and the corresponding approving authority in the case of any other enterprise)

C
In the cash flow statement

D
None of the above

Solution

Contingent assets are never disclosed in the financial statements or cash flow statements.
If they are probable, they are only disclosed in the report of an approving authority.
Note: When the realization of income is virtually certain, then the related asset is not contingent asset and recognition is appropriate in the financial statement.
Question 3
1 / -0

Contingent asset is not recognised in the financial statements on the basis of the accounting concept ____________.

A
Materiality

B
Prudence

C
Substance over form

D
None
Question 4
1 / -0

A sends out goods costing Rs 2,00,000 to B. Consignor's expenses Rs 5,000. Consignee's expenses in relation to sales Rs 3,000. 4/5th of the goods were sold at 20% above cost. The profit on consignment will be _____________.

A
Rs 25,000

B
Rs 31,000

C
Rs 25,200

D
Rs 5,000
Question 5
1 / -0

In balance sheet "interest accrued and not due on debentures" should be shown in ______.

A
Debentures

B
Current liability

C
Miscellaneous expenditure

D
Current assets

Solution

Interest accrued and due on debentures appear under the head 'Secured Loans'. Interest accrued but not due on debentures appear under the head 'Current Liabilities'.
Question 6
1 / -0

Which of the following items is not an appropriation of profit for a limited company?

A
Preference shares dividend payable by the company.

B
Ordinary dividend payable by the company.

C
Income tax payable by the company.

D
Debenture interest payable by the company.

Solution

Interest paid on debenture is a liability and it is fixed in nature. In case of dividends it is not fixed in nature to pay. Dividends are appropriation of profits earn by the company on the other hand debenture is a long term liability of a company and its interest is expense not appropriation of profits.
Question 7
1 / -0

A contingent asset is a possible asset that arises from past events the existence of which will be confirmed only by the '_________' of one or more uncertain future events not wholly within the control of the enterprise.

A
Occurrence

B
Non-occurrence

C
Both (A) & (B)

D
(A) & (B)
Question 8
1 / -0

Deferred credits will appear on the balance sheet with the________.

A
Assets

B
Liabilities

C
Owner's Equity

D
Any of the above

Solution

A deferred credit could mean money received in advance of it being earned, such as deferred revenue, unearned revenue, or customer advances. Deferred revenue refers to payments received in advance for services which have not yet been performed or goods which have not yet been delivered. These revenues are classified on the company's balance sheet as a liability and not as an asset.
Question 9
1 / -0

In balance sheet "interest accrued and due on debentures" should be shown in ______.

A
Debentures

B
Miscellaneous expenditure

C
Current assets

D
Current liability

Solution

No interest is payable on debentures issued as collateral security. Interest accrued and due on debentures appear under the head 'Secured Loans' or debentures. Interest accrued but not due on debentures appear under the head 'Current Liabilities'.
Question 10
1 / -0

Securities premium account must be shown separately on the liabilities side of the balance sheet in _______ under the heading ______.

A
Share Capital; Shareholders Funds

B
Reserves & Surplus; Shareholders Funds

C
Secured Loan; Reserves & Surplus

D
Unsecured Loan; Profit & Loss

Solution

The share premium account is an equity account found on a company's balance sheet. The amount in the account represents the additional amount shareholders paid for their issued shares that was in excess of the par value of those shares. It is shown under liabilities side in the balance sheet as Reserve or surplus and shows up in the shareholders' equity portion of the balance sheet. The shareholders' equity portion of the balance sheet represents the initial amount of money invested in the business.

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Financial Statements of a Company Test 20

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Financial Statements of a Company Test 20

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SHARING IS CARING

Question 1

Assets side under intangle Assets

Assets side under current assets

Liabilities side under current liability

Liabilities side under reserves

None of the above

Solution

Question 2

In the financial statements

In the report of the approving authority(Board of Directors in the Case of a company, and the corresponding approving authority in the case of any other enterprise)

In the cash flow statement

None of the above

Solution

Question 3

Materiality

Prudence

Substance over form

None

Question 4

Rs 25,000

Rs 31,000

Rs 25,200

Rs 5,000

Question 5

Debentures

Current liability

Miscellaneous expenditure

Current assets

Solution

Question 6

Preference shares dividend payable by the company.

Ordinary dividend payable by the company.

Income tax payable by the company.

Debenture interest payable by the company.

Solution

Question 7

Occurrence

Non-occurrence

Both (A) & (B)

(A) & (B)

Question 8

Assets

Liabilities

Owner's Equity

Any of the above

Solution

Question 9

Debentures

Miscellaneous expenditure

Current assets

Current liability

Solution

Question 10

Share Capital; Shareholders Funds

Reserves & Surplus; Shareholders Funds

Secured Loan; Reserves & Surplus

Unsecured Loan; Profit & Loss

Solution

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