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Financial Statements of a Company Test 4

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Financial Statements of a Company Test 4
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Pre-acquisition profit in subsidiary company is considered as ______________.
    Solution
    Pre-acquisition profit is the profit earned by the company before it is being acquired. It is treated as capital profit and not revenue profit and is not available for distribution of dividend.
  • Question 2
    1 / -0
     Item to be included in reserve & surplus ?
    Solution
    Reserves are created out of undistributed profits. It may be in the form of general reserve or capital reserve.
    Reserves and Surplus are a part of the Balance Sheet and includes Capital Redemption Reserve, General Reserve, Security Premium etc all are shown.
  • Question 3
    1 / -0
    The balance of payments account is conventionally divided into :
    Solution
    There are three components of balance of payment viz current account, capital account, and financial account. The total of the current account must balance with the total of capital and financial accounts in ideal situations.
    Therefore, A is the correct option.
  • Question 4
    1 / -0
    Current liabilities refer to such liabilities, which mature _____.
    Solution
    Current Liabilities are those liabilities which have to be redeemed in the near future, usually within a year. This liabilities are arises during the course of business. 
    Trade creditors, Bills payable, outstanding expenses are the examples of current liabilities.
  • Question 5
    1 / -0
    Types of fixed assets are ______.
    Solution
    Fixed assets are those assets which are durable in nature and used in the business over and over again. Fixed assets are further classified in to two categories:

    Tangible Assets: These are assets which are tangible in nature i.e. these assets have existence, can be physically seen and touched. Examples are Plant & Machinery, Land & Building etc.

    Intangible Assets: These are assets which are intangible in nature i.e. these assets have  no physical existence, can't be seen and touched. Examples are Goodwill, Trademarks, Copy rights etc.
  • Question 6
    1 / -0
    'Comparison of the financial statements of the current year with the performance of previous years of the same firm', is known as :
  • Question 7
    1 / -0
    Which of the following is a revenue reserve?
    Solution
    Capital profits are source of capital reserves and the revenue profits constitutes revenue reserves. Capital reserves are used to set off the capital losses but revenue reserves are used to strengthen the financial position, distribute dividend, replace fixed assets and pay off the liabilities.

    Share premium account is a revenue reserve and can be utilized to distribute dividend.  
  • Question 8
    1 / -0
    Which of the following is not source of Funds?
    Solution
    By source of funds we mean that money is coming in the business. In the given question all of them are sources of funds except issue of bonus shares. The company issues bonus shares out of its own reserves and hence there is no money received by the company for such shares. Rest all being sale of fixed assets, issue of share capital and issue of shares for consideration other than cash are a part of sources of funds. 
  • Question 9
    1 / -0
    Which capital refers to the paid-up value of the issued capital?
    Solution
    Subscribed capital is that part of issued capital which is being subscribed by the shareholders. By, subscribed we mean that they have subscribed for the issued shares and made payment for the same. Subscribed and issued share capital are not necessarily the same. 
  • Question 10
    1 / -0
    Unclaimed dividends is shown on the liability side of the balance sheet under the heading ____________ .
    Solution
    Once the dividend is declared by the company and if it is not paid of or claimed within 30 days, company has to transfer the same amount in a separate account. 
    It is a current liability and to be shown in the balance sheet.
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