Financial Statements of a Company Test 3

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Financial Statements of a Company Test 3

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Weekly Quiz Competition

Question 1
1 / -0

Owners equity or net worth is __________.

A
Liability

B
Assets

C
Revenue

D
Capital

Solution

Capital is the amount invested by a business man in his business to start it. It is nothing but the net worth of the business. Hence, Owner's equity or net worth is the capital.
Question 2
1 / -0

Valuation balance sheet is prepared by a life insurance company to find out _______________.

A
Profit of loss

B
Financial position

C
Surplus or deficiency

D
Net liability

Solution

Valuation balance sheet is prepared by the life insurance company, or it is prepared by the actuary for the life insurance company. An Actuary is a person who evaluates risk in an insurance given by an insurance company. Valuation balance sheet is prepared by the life insurance company to evaluate the surplus or deficiency.
Question 3
1 / -0

Statement - I : Capital structure refers to composition of long-term funds.
Statement - II : These include equity share capital, preference share capital, debentures, all debts and all reserves.

A
Both Statements I and II are correct

B
Statement I is correct but Statement II is incorrect

C
Statement I is incorrect but Statement II is correct

D
Both statements are incorrect

Solution

Capital structure refers but to composition of long term funds that include debts, share capital and preference share capital, Capital structure doesn't include all reserves. Hence, the first and second statement is incorrect.
Question 4
1 / -0

Preliminary expenses are recorded in

A
Equity and liabilities - Liability side of B/S

B
Current liabilities - Liability side of B/S

C
Fixed assets - Asset side of B/S

D
Asset side of B/S

Solution

Preliminary expenses are incurred before the incorporation, initial stage, and commencement of the business. The expenses incidental to the formation of a company also regarded as a preliminary expense. These are considered deferred revenue expenditure. A part of these expenses is debited every year to the profit and loss account. Preliminary expenses are shown on the assets side of the balance sheet under the heading other assets.
Therefore, D is the correct option.
Question 5
1 / -0

Section $$3$$ of the companies Act $$2013$$ allows the formation of a _________.

A
one person company

B
private company

C
public company

D
none of the above

Solution

To encourage the self employment in India, Companies Act 2013 introduced the formation one person company (OPC).
There are certain guidelines issued for formation of OPC:
1) There will be only one promoter/founder of the company
2) There should be one nominee in case of death or any other incapacity of the promoter/founder.
3) Only natural person who is resident of India in the preceding financial year can form the OPC.
4) A person can not form more than one OPC, or can not be nominee of more than one OPC.
5) Rules of OPC do not permit Non Banking Financial Institution.
Question 6
1 / -0

Minimum Alternate Tax (MAT) is imposed on

A
All companies

B
Public Limited Companies only

C
Private Limited Companies only

D
Partnership Firms and Companies
Question 7
1 / -0

Which among the following is not a category of Non-Performing Assets?

A
Substandard Assets

B
Doubtful Debts

C
Loss Assets

D
Devaluated Assets
Question 8
1 / -0

Which of the followings are accumulated profits?

A
General Reserve

B
Revenue Reserve

C
Profit and Loss (cr)

D
All of the above

Solution

The profit earned by business through business operations is available for distribution. Hence, it is termed divisible profit. However, sometimes a sum of such divisible profit is kept aside for future discrepancies under the name general reserve, revenue reserve, profit and loss account (cr. balance), etc, resulting in accumulation of profits.
Question 9
1 / -0

If the taxable income of a domestic company for the Assessment Year $$2011-12$$ is $$Rs. 9,00,000$$, its tax liability will be _____________.

A
$$Rs. 2,76,800$$

B
$$Rs. 2,78,100$$

C
$$Rs. 3,70,800$$

D
$$Rs. 3,70,880$$
Question 10
1 / -0

Which of the following is not relevant to the dividend decision?

A
Availability of disposable profit.

B
Investors' expectations for dividend.

C
Capital market conditions.

D
Industry practice.

Solution

Capital market conditions refer to upward or downward trends in capital market. Both these conditions have their influence on the selection of sources of finance. They do not influence the dividend policy of the company.

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Re-Attempt Weekly Quiz Competition

Financial Statements of a Company Test 3

Result

Financial Statements of a Company Test 3

Score

-

Rank

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SHARING IS CARING

Question 1

Liability

Assets

Revenue

Capital

Solution

Question 2

Profit of loss

Financial position

Surplus or deficiency

Net liability

Solution

Question 3

Both Statements I and II are correct

Statement I is correct but Statement II is incorrect

Statement I is incorrect but Statement II is correct

Both statements are incorrect

Solution

Question 4

Equity and liabilities - Liability side of B/S

Current liabilities - Liability side of B/S

Fixed assets - Asset side of B/S

Asset side of B/S

Solution

Question 5

one person company

private company

public company

none of the above

Solution

Question 6

All companies

Public Limited Companies only

Private Limited Companies only

Partnership Firms and Companies

Question 7

Substandard Assets

Doubtful Debts

Loss Assets

Devaluated Assets

Question 8

General Reserve

Revenue Reserve

Profit and Loss (cr)

All of the above

Solution

Question 9

$$Rs. 2,76,800$$

$$Rs. 2,78,100$$

$$Rs. 3,70,800$$

$$Rs. 3,70,880$$

Question 10

Availability of disposable profit.

Investors' expectations for dividend.

Capital market conditions.

Industry practice.

Solution

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