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Financial Statements of a Company Test 25

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Financial Statements of a Company Test 25
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Weekly Quiz Competition
  • Question 1
    1 / -0
    An ordinary share dividend is_______________________.
    Solution

    Shares which do not enjoy any preferential right in the payment of dividend or repayment of capital, are termed as equity/ordinary shares.

    The equity shareholders are entitled to share the distributable profits as reward the for their investment in the company after satisfying the dividend rights of the preference shareholders. The dividend on equity shares is not fixed and it may vary from year to year.

  • Question 2
    1 / -0
    Subscription received in advance is classified in the Balance Sheet of a club as ___________.
    Solution
    Under the accrual method of accounting, income that is received in advance is a liability because the company that received the money has not yet earned it and it has an obligation (a liability) to deliver the related goods or services in the future.
    Thus, subscription received in advance is classified in the Balance Sheet of a club as Current liability.
  • Question 3
    1 / -0
    Each  of the following is a type of known misstatement except______________________.
    Solution

    Misstatement refers to error in the financial statement and there can be different types of misstatement. An inaccuracy in processing data, misapplication of accounting principles and difference between the classification of a reported financial statement element and the classification according to generally accepted accounting principles are all the example of misstatement. But difference between management and the auditor's judgment regarding estimates is not covered under misstatement. It’s just a difference in view on future projection based on current evidence.

  • Question 4
    1 / -0
    Which of the following items would not form part of the shareholders' equity of a company on the statement of financial position?
    Solution
    Share capital consists of all funds raised by a company in exchange for shares of either common or preferred shares of stock.
    Shares which do not enjoy any preferential right in the payment of dividend or repayment of capital, are termed as equity/ordinary shares.
    In case shares are issued at a premium, i.e. at an amount more than the nominal or par value of shares is known as share premium,
    Profits generated by a company that are not distributed to stockholders are retained earnings, forms the part of shareholder's equity.
     whereas Trade payable are the total amount payable by a business for goods purchased or services availed as a part of their business operations. Trade payable comprise of Creditors and Bills Payable which creates the part of liabilities in financial statements.
  • Question 5
    1 / -0
    Statements of Standard Accounting Practice and Financial Reporting Standards should be complied with when preparing the final accounts of limited company because__________________.
    Solution
    Accounting Standard 1 is related to Presentation of Financial Statements. It sets out the overall requirements for financial statements, including how they should be structured. 
    The objective of IAS 1 is to prescribe the basis for presentation of general purpose financial statements. The financial statements must present fairly the financial position, financial performance and cash flows of an entity. The application of IFRS, with additional disclosure when necessary is presumed to result in financial statements that achieve a fair presentation.  
  • Question 6
    1 / -0
    If outstanding wages appears in trial balance, while preparing the final accounts it will be shown in_____________.
  • Question 7
    1 / -0
    Which of the following statement is true?
    Solution
    Authorised share capital - This is also known as registered capital. It is the maximum amount of capital that the limited company is authorised to issue to its shareholders. Issued capital means that portion of authorised capital which has been issued. thus authorised capital is more than issued capital.
  • Question 8
    1 / -0
    Adjusted closing entry affects _______________.
    Solution
    Adjusting entries are journal entries recorded at the end of an accounting period to adjust income and expenses accounts so that they comply with the actual concept of accounting. Their main purpose is to match income and expenses to appropriate accounting periods. Adjusting closing entry affects Balance Sheet.
  • Question 9
    1 / -0
    If prepaid rent appears in the trial balance, while preparing the final accounts it will be shown in_________.
  • Question 10
    1 / -0
    Which of the following will define, when appropriation of a certain number of shares is made to an applicant in response to his application?
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