Financial Statements of a Company Test 28

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Financial Statements of a Company Test 28

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Question 1
1 / -0

Financial statements generally include.

A
Comparative statement

B
Fund flow statement

C
Income statement and Balance sheet

D
All of the above

Solution

Financial statements are written records of a business's financial situation. They include standard reports like the balance sheet, income or profit and loss statements, and cash flow statement.
In a technical sense, financial statements are a summation of the financial position of an entity at a given point in time.
Question 2
1 / -0

What is the best definition of a non-current asset ?

A
Review Later

B
The total of current assets less current liabilities

C
An asset purchased for resale

D
Expenditure made to fulfill a revenue obligation

E
An asset intended for use on a continuing basis in the company's activities
Question 3
1 / -0

Arrange the following according to their increasing order of 'liquidity', using the code given below:
1. Saving deposits with the banks
2. Currency and coins with the public
3. Demand deposits with the banks
4. Term deposits with the banks.

A
$$1, 2, 3, 4$$

B
$$2, 3, 4, 1$$

C
$$3, 4, 1, 2$$

D
$$4, 1, 3, 2$$

Solution

Demand deposits will have more liquidity than the saving deposits as the former includes the 'current accounts' of the firms (the most liquid deposit with the banks).

Question 4

1 / -0

In the case of joint stock companies, the assets and liabilities in B/s are arranged in the order of _________.

Serial number

Performance

Availability

None of the above

Solution

Section 211 of the Companies act requires the preparation of balance sheet at the end of each financial year in a prescribed format (except for insurance, banking, electricity).

These formats are horizontal form of balance sheet or vertical form of balance sheet. Joint stock companies are required to present the assets and liabilities in the order of performance.

Balance sheet should have the following main items as per Schedule VI, Part I of the Companies Act:

Liabilities	Amount	Assets	Amount
Share Capital		Fixed Assets
Reserves & Surpluses		Investments
Secured Loans		Current Assets, Loans & Advances
Unsecured Loans		a) Current Assets
Current Liabilities & Provisions		b) Loans & Advances
		Miscellaneous Expenditure
		Profit & Loss A/c

Question 5
1 / -0

Which of the following reserves cannot be distributed as dividend to share holders?

A
Securities premium

B
Profit on forfeiture of shares

C
Profit on sale of fixed assets

D
All of the above

Solution

Dividend can be distributed from the profits earned by the business from its business operations. Securities premium, profit on forfeiture of shares and profit on sale of fixed assets are not the item of business operations, hence dividend can not be distributed from these.
Question 6
1 / -0

When the proposed dividend exceeds 20% of paid up capital, percentage of profit transferred to general reserve is _______.

A
2.5%

B
5%

C
7.5%

D
10%

Solution

No dividend shall be declared or paid by the company for any financial year out of the profits of the company except after the transfer to the reserves of the company a certain percentage of the profits of that financial year.

The major guidelines are as under:

1) If dividend proposed is more than 10% and less than 12.5% of the paid up capital- 2.5% of the current years profits to be transferred to reserves.
2) If dividend proposed is more than 12.5% but does not exceed 15% of the paid up capital- 5% of the current years profits to be transferred to reserves.
3) If dividend proposed is more than 15% but does not exceed 20% of the paid up capital- 7.5% of the current years profits to be transferred to reserves.
4) If dividend proposed is more than 20% - 10% of the current years profits to be transferred to reserves.
Question 7
1 / -0

Which of the following represents source of fund in the balance sheet of a company?

A
Secured loan.

B
Share capital.

C
Reserves & surplus.

D
All of the above.

Solution

Sources of funds can be categorized as short term source and long term source of funds. Secured loan, share capital and reserves & surplus are long term sources of funds.
Question 8
1 / -0

Unclaimed dividend is shown in the ________.

A
P/L Account

B
P/L Appropriation Account

C
Balance Sheet

D
None of the Above

Solution

Section 125 of the Companies Act 2013 specifically deals with the dividend declared by the company but not claimed by the shareholders. If the dividend declared is not claimed up to 7 years should be transferred to Investor Education & Protection fund.
Such account for the unclaimed dividend is a liability for the company to be paid and to be shown in balance sheet.
Question 9
1 / -0

Fictitious assets are shown on the asset side of the balance sheet of a company under the heading ________.

A
Fixed Asset

B
Current Asset

C
Miscellaneous Expenditure

D
None of these

Solution

Fictitious assets are those assets which are not real but whose benefits are derived by the company over a long period of time. Examples of fictitious assets are deferred revenue expenditure, preliminary expenses, etc.
These are shown on the asset side of the balance sheet under the head "Miscellaneous Expenditure".
Question 10
1 / -0

Calls in advance is shown in the balance sheet as _______.

A
current liabilities

B
added to called-up capital

C
current assets

D
deduction from called-up capital

Solution

Calls in advance is an amount which is excess paid by the shareholders against which the calls are not yet due. Calls in advance is a current liability.

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Re-Attempt Weekly Quiz Competition

Financial Statements of a Company Test 28

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Financial Statements of a Company Test 28

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Rank

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SHARING IS CARING

Question 1

Comparative statement

Fund flow statement

Income statement and Balance sheet

All of the above

Solution

Question 2

Review Later

The total of current assets less current liabilities

An asset purchased for resale

Expenditure made to fulfill a revenue obligation

An asset intended for use on a continuing basis in the company's activities

Question 3

$$1, 2, 3, 4$$

$$2, 3, 4, 1$$

$$3, 4, 1, 2$$

$$4, 1, 3, 2$$

Solution

Question 4

Serial number

Performance

Availability

None of the above

Solution

Question 5

Securities premium

Profit on forfeiture of shares

Profit on sale of fixed assets

All of the above

Solution

Question 6

2.5%

5%

7.5%

10%

Solution

Question 7

Secured loan.

Share capital.

Reserves & surplus.

All of the above.

Solution

Question 8

P/L Account

P/L Appropriation Account

Balance Sheet

None of the Above

Solution

Question 9

Fixed Asset

Current Asset

Miscellaneous Expenditure

None of these

Solution

Question 10

current liabilities

added to called-up capital

current assets

deduction from called-up capital

Solution

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