Financial Statements of a Company Test 5

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Financial Statements of a Company Test 5

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Weekly Quiz Competition

Question 1
1 / -0

Flow of foreign loans and investments affect

A
Trade balance

B
Current Account balance

C
Capital Account balance

D
None of the above

Question 2

1 / -0

Match List-I with List-II and select the correct answer using the codes given below the lists:

List-I(Item of balance sheet of company)	List-I(Heading of balance sheet)
(a) Profit prior to Incorporation	1. Provisions
(b) Proposed dividend	2. Misc.Expenditure
(c) Interest paid out of Capital	3. Current liabilities
(d) Unclaimed dividend	4. Reserve & surplus

(a)-4, (b)-1, (c)-3, (d)-2

(a)-4, (b)-1, (c)-2, (d)-3

(a)-1, (b)-4, (c)-2, (d)-3

(a)-1, (b)-4, (c)-3, (d)-2

Solution

Item of Balance Sheet	Heading of Balance Sheet
Profit prior to Incorporation	Reserves & Surplus
Proposed Dividend	Provisions
Interest paid out of capital	Misc. Expenditure
Unclaimed dividend	Current Liabilities

Question 3
1 / -0

The debit balance of current account is shown on ___________________.

A
Asset side of Balance Sheet

B
Liabilities side of Balance Sheet

C
Credit side of Profit and Loss Account

D
None of the above

Solution

The debit balance of the current account signifies that the owner owes the business money. Hence the business has the right to get money from the owner as his account is overdrawn. Hence, the current account having a debit balance should be shown on the asset side of the Balance Sheet.
Question 4
1 / -0

Investment comes under the _______head.

A
Liabilities

B
Assets

C
Reserve & surplus

D
None of the above

Solution

Assets of the business are classified in to two major categories:
Fixed Assets
Current Assets
Investments are those which the business has invested to gain extra revenue.
Investments are assets for the business.
Question 5
1 / -0

'Debenture Premium Account' is shown ___________________.

A
On the assets side of the Balance Sheet

B
On the liabilities side of the Balance Sheet under the head Reserve & Surplus

C
On the liabilities side of the Balance Sheet under the head capital

D
None of the above

Solution

Debenture Premium is the money that is received in excess of the face value of debenture. Hence, it is like profit and has to be transferred to the reserves and surplus account.
Question 6
1 / -0

The profit & loss disclosed by the accounts of a company is ________________.

A
Transferred to share capital account

B
Shown in the column of 'Current Liabilities and Provisions'

C
Shown in the column of ' Reserves & surplus' under a separate account

D
Transferred to general reserve

E
Transferred to Dividends payable account

Solution

Profit and loss disclosed by the company should be shown under the head reserves and surplus as Surplus i.e., balance from statement of profit and loss account.
Question 7
1 / -0

How the following liabilities are to be shown on the liability side of the balance sheet in the order of permanence ?
1. Current liabilities and provisions
2. Secured loans
3. Share capital
4. Unsecured loans
5. Reserves and surplus

A
3, 5, 2 , 4 , 1

B
3 , 2 , 1 , 4 , 5

C
1 , 4 , 2 , 5 , 3

D
5, 4, 3, 2, 1

Solution

Order of permanence is where assets or liabilities are shown in the balance sheet in the order of permanence, the more permanent the asset or liability the earlier they appear in the balance sheet.
3) Share Capital
5) Reserves and Surplus
2) Secured loans
4) Unsecured Loans
1)Current liabilities and provisions.
Question 8
1 / -0

Consider the following statements :
1. The companies Act, 2013 provides provisions related to uniform financial year from 1st April to 31st, March.
2. The companies Act, 2013 does not provides any provision related to 'Corporate Social Responsibility (CSR)'.
3. The companies Act, 2013 was passed by 'Rajya Sabha' on 8th August,2013.
Which of the above statement/s is/are not true ?

A
1 and 2

B
Only 1

C
Only 2

D
2 and 3

Solution

The only statement that is untrue is the 2nd statement. The companies Act 2013 does provides provisions related to 'Corporate Social Responsibility'. As per the Companies Act 2013, So, any company which has net worth of Rs-500 crore or a turnover of Rs-1000 crore or net profit of Rs-5 crore will have to compulsorily spend 2% of its average net profit for immediately 3 preceeding years on CSR Activities.
Question 9
1 / -0

Redeemable Preference Shares of Rs. 2,00,000 are to be redeemed at a premium of $$10\%$$. Balance sheet shows profit Rs. 30,000. General Reserve - Rs. 20,000; Share Premium - Rs. 8,000 and Dividend Equalization fund Rs.50,000. How much fresh capital should be issued in order to comply with the provisions of Sec.80 of the companies act, 1956?

A
Rs. 2,00,000

B
Rs. 2,12,000

C
Rs. 2,62,000

D
Rs. 1,12,000

Solution

As per section 80 of the Companies Act 1956, company can redeem preference shares only out of fresh issue or profits that are available for distribution as dividends. In case, there is premium to be paid on redemption it should be paid out of profit available for paying dividends or out of securities premium account.
Amount to be paid on redemption = 2,00,000 + 20,000 ( 10% of 2,00,000)
= 2,20,000
Amount of fresh issue = Amount to be paid on redemption - (Free reserves +    securities premium reserve)
   = 2,20,000 - ( 30,000 + 20,000 + 8,000 + 50,000)
   = Rs-1,12,000.
Question 10
1 / -0

Share forfeited account is shown on the liability side of the balance sheet _____________.

A
Under the heading of 'Reserve and surplus'

B
By adding to the paid up capital

C
Under the heading 'Current Liabilities, and provisions

D
Under the heading of "Miscellaneous'

Solution

Share forfeited is shown under the head Reserves and surplus on the liability side of balance sheet. Share forfeited is created when the company cancels the shares of a shareholder because of non payment of allotment or call money if so permitted by its articles. It is a capital gain for the company and hence will be shown in the reserves and surplus account.

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Re-Attempt Weekly Quiz Competition

Financial Statements of a Company Test 5

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Financial Statements of a Company Test 5

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SHARING IS CARING

Question 1

Trade balance

Current Account balance

Capital Account balance

None of the above

Question 2

(a)-4, (b)-1, (c)-3, (d)-2

(a)-4, (b)-1, (c)-2, (d)-3

(a)-1, (b)-4, (c)-2, (d)-3

(a)-1, (b)-4, (c)-3, (d)-2

Solution

Question 3

Asset side of Balance Sheet

Liabilities side of Balance Sheet

Credit side of Profit and Loss Account

None of the above

Solution

Question 4

Liabilities

Assets

Reserve & surplus

None of the above

Solution

Question 5

On the assets side of the Balance Sheet

On the liabilities side of the Balance Sheet under the head Reserve & Surplus

On the liabilities side of the Balance Sheet under the head capital

None of the above

Solution

Question 6

Transferred to share capital account

Shown in the column of 'Current Liabilities and Provisions'

Shown in the column of ' Reserves & surplus' under a separate account

Transferred to general reserve

Transferred to Dividends payable account

Solution

Question 7

3, 5, 2 , 4 , 1

3 , 2 , 1 , 4 , 5

1 , 4 , 2 , 5 , 3

5, 4, 3, 2, 1

Solution

Question 8

1 and 2

Only 1

Only 2

2 and 3

Solution

Question 9

Rs. 2,00,000

Rs. 2,12,000

Rs. 2,62,000

Rs. 1,12,000

Solution

Question 10

Under the heading of 'Reserve and surplus'

By adding to the paid up capital

Under the heading 'Current Liabilities, and provisions

Under the heading of "Miscellaneous'

Solution

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