Financial Statements of a Company Test 23

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Financial Statements of a Company Test 23

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Question 1
1 / -0

Position statement of the firm includes __________.

A
Assets

B
Liabilities

C
Expenses

D
Both a & b

Solution

A balance sheet (also called the statement of position statement), can be defined as a statement of a firm's assets, liabilities and net worth. goodwill is an asset.
Question 2
1 / -0

It is not a feature of balance sheet ________________.

A
Shows the position of capital.

B
Prepared for a particular period.

C
It is a statement.

D
Both b & c

Solution

A balance sheet is a statement of the financial position of a business which states the assets, liabilities and owner's equity at a particular point in time. It helps the investors to know the earning capacity of the firm and the dividend pay-out ratio. It also provides valuable information about the existence of the firm after scrutinising some financial ratios to the creditors and investors by which they can take proper decisions.
Question 3
1 / -0

Liabilities and provisions made by sole proprietor are transferred to ________.

A
left hand side of the balance sheet

B
left hand side of profit and loss statement

C
left hand side of trading account

D
none of the above

Solution

Standard accounting conventions present the balance sheet in one of two formats: the account form (horizontal presentation) and the report form (vertical presentation). But now According to the companies Act 2013 The balance sheet of a company is prepared as per the formal prescribed in part II of Schedule III of the Act in vertical presentation.

Liabilities and provisions made by sole proprietor are transferred to left hand side of the balance sheet.
Question 4
1 / -0

Financial statements are prepared mainly for______________.

A
Internal users of financial information

B
External users of financial information

C
Creditors of the business

D
Managers of the business

Solution

Prospective Investors need Financial Statements to assess the viability of investing in a company. Investors may predict future dividends based on the profits disclosed in the Financial Statements.
Question 5
1 / -0

Which of the following is not shown in balance sheet of sole proprietor?

A
Fixed assets

B
Current liabilities

C
Profit sharing ratio

D
Long term assets

Solution

A sole proprietorship, also known as the sole trader, individual entrepreneurship or proprietorship, is a type of enterprise that is owned and run by one person and in which there is no legal distinction between the owner and the business entity.
The owner is in direct control of all elements and is legally accountable for the finances of such business and this may include debts, loans, loss, etc. The sole trader receives all profits and has unlimited responsibility for all losses and debts.
Question 6
1 / -0

Samar purchased a machinery worth Rs. 1,00,000 and spent Rs. 20,000 on its repairs and Rs. 15,000 on its carriage. He decided to sell the machinery at 25% margin on selling price. What will be the expected sale value of machinery?

A
Rs. 1,25,000

B
Rs. 1,53,090

C
Rs. 1,80,000

D
Rs. 1,33,000

Solution

Cost of machinery $$ = Rs. 1,00,000 + 20,000+15,000$$
$$ = Rs. 1,35,000$$
25% on selling price = $$\frac{25}{100-25}$$ on cost of machinery
$$ = 25x135000/75=45,000$$
$$Rs. 1,35,000 + Rs. 45,000 = Rs. 1,80,000$$
Question 7
1 / -0

If outstanding wages appear in the trial balance, while preparing the final accounts; it will be shown in __________________.

A
Asset side of the balance sheet

B
Liability side of the balance sheet

C
Profit and Loss A/c and asset side of the balance sheet

D
Profit and Loss A/c and Liability side of the balance sheet

Solution

Outstanding wages means these are the wages which are yet to be cleared/paid and hence these are shown in the trial balance on the credit side while in the balance sheet on the liabilities side to be payable till these ones get paid.
Question 8
1 / -0

An equipment was purchased on 1st January, 2012 for Rs. 25,000 and is to be depreciated at 30% based on reducing balance method. If the company closes its books of account on 31st March every year, what would be the net book value-of the equipment as at 31 * December, 2013 ______________.

A
Rs. 12,250

B
Rs. 17,750

C
Rs. 10,000

D
Rs. 12,545.

Solution

Value of Equipment as on 1st Jan $$2012= Rs. 25,000$$
Less: Depreciation for the year $$2012 = 7,500$$
Total $$ = 17,500$$
Less: Depreciation for the year 2013(17,500 x 30%) $$= 5,250$$
Net Book value of the Equipment $$ = Rs. 12,250$$
Question 9
1 / -0

A statement or report that records the fluctuation in business's capital is referred as_____________.

A
Balance sheet

B
Income statement

C
Cash flow statement

D
Statement of changes in equity

Solution

Statement of changes in equity is the report of documents, all changes in equity or business capital during the reporting period. These changes include the issuance or purchase of shares, dividends issued, and profits or losses.
Question 10
1 / -0

Balance sheet is always prepared___________.

A
For the year ended

B
As on a specific date

C
For a current year

D
None of these

Solution

A balance sheet is a statement of the financial position of a business which states the assets, liabilities and owner's equity at a particular point in time.
It helps the investors to know the earning capacity of the firm and the dividend pay-out ratio.
It also provides valuable information about the existence of the firm after scrutinizing some financial ratios to the creditors and investors by which they can take proper decisions.

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Financial Statements of a Company Test 23

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Financial Statements of a Company Test 23

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SHARING IS CARING

Question 1

Assets

Liabilities

Expenses

Both a & b

Solution

Question 2

Shows the position of capital.

Prepared for a particular period.

It is a statement.

Both b & c

Solution

Question 3

left hand side of the balance sheet

left hand side of profit and loss statement

left hand side of trading account

none of the above

Solution

Question 4

Internal users of financial information

External users of financial information

Creditors of the business

Managers of the business

Solution

Question 5

Fixed assets

Current liabilities

Profit sharing ratio

Long term assets

Solution

Question 6

Rs. 1,25,000

Rs. 1,53,090

Rs. 1,80,000

Rs. 1,33,000

Solution

Question 7

Asset side of the balance sheet

Liability side of the balance sheet

Profit and Loss A/c and asset side of the balance sheet

Profit and Loss A/c and Liability side of the balance sheet

Solution

Question 8

Rs. 12,250

Rs. 17,750

Rs. 10,000

Rs. 12,545.

Solution

Question 9

Balance sheet

Income statement

Cash flow statement

Statement of changes in equity

Solution

Question 10

For the year ended

As on a specific date

For a current year

None of these

Solution

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