Financial Statements of a Company Test 6

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Financial Statements of a Company Test 6

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Question 1
1 / -0

Where a special permission has been granted by the registrar the 'financial year' of a company may at the most be ________________.

A
Extended to 13 months

B
Extended to 15 months

C
Extended to 18 months

D
Extended to 20 months

Solution

Generally, a financial year of a company is 12 months but a newly formed company with a special permission from the registrar of the company can extend its financial year upto 18 months.
Question 2
1 / -0

'Calls in arrears' is shown in the balance sheet on the liability side _____________.

A
By deducting the amount from the called up capital

B
Under the heading Reserves and Surplus

C
By deducting the amount from the called up capital reserves

D
By deducting the amount from the shares forfeited account

Solution

Calls in arrears means that the company has demanded money but the shareholders have not yet paid the money. Calls in arrears is an asset of the company and the company has a right on the same. Hence, they are deducted from share capital on the liabilities side of the balance sheet.
Question 3
1 / -0

Unclaimed dividends is shown on the liability side of the balance sheet under the heading of ________________.

A
Reserves and Surplus

B
Provisions

C
Current Liabilities

D
Miscellaneous Items

Solution

Unclaimed dividend is the dividend which is being paid by the company but the shareholder has not yet taken the dividend or claimed the dividend. Unclaimed dividend is to be paid by the company as and when demanded and hence is a liability for the company. It is a current liability because usually has be met within 12 months.
Question 4
1 / -0

When one existing company goes into liquidation and a new company is formed to take over its business, it is called an _____________.

A
Absorption

B
Amalgamation

C
External Reconstruction

D
Internal Reconstruction

Solution

External reconstruction means where the company goes in to liquidation which means sells its assets and liabilities to form a new company. They sell the assets and liabilities and form a new company with similar name.
Question 5
1 / -0

The income tax deducted from interest paid on debentures is shown on the _____________.

A
Assets side of the balance sheet

B
Liability side of the balance sheet

C
Credit side of profit & loss account

D
Debit side of profit & loss account

Solution

Tax deducted from interest paid on debentures is always shown on the liabilities side of the balance sheet. It is liability for the company as the company has deducted it on the behalf of the government and it has to be given to the government.
Question 6
1 / -0

Interim dividend is shown ______________.

A
in profit & loss account

B
in profit & loss appropriation account

C
on the assets side of balance sheet

D
on the liability side of balance sheet

Solution

An interim dividend is declared between two annual general meetings. As per regulation 86 of table A, the board may from time to time pay to shareholders such interim dividends as it appears to be justified keeping in view the profits of the company. The article of association may allow for the payment of such a dividend if table A has not been adopted by the company.
An interim dividend, like the final dividend, is an appropriation of profits that has to be shown on the debit side of the profit and loss appropriation account.
Question 7
1 / -0

Debentures are shown in the balance sheet of a company under the item ______________.

A
Secured loans

B
Unsecured loans

C
Current Liabilities

D
None of the above

Solution

Debentures are shown in the balance sheet of the company under the item Secured loans. Debentures are usually secured against the assets of the company. In case of debentures they are not secured by providing a collateral or security. These debentures have a charge on the assets.
Question 8
1 / -0

Figures in Rs. Lacs
Calculate the amount of Purchase consideration, if Anju Ltd. agrees to take over only the floating assets and trade liabilities of Madhu Ltd. and to discharge the purchase consideration by issuing equity shares of Rs. 10 each at a premium of $$4.5\%$$.The market value of an equity share of Anju Ltd. at present is Rs. 100.
The Balance Sheets of Anju Ltd. and Madhu Ltd. as at 31-3-2014 is given, on which date Madhu Ltd was taken over by Anju Ltd.

A
Rs. 4,10,000

B
Rs. 4,10,025

C
Rs. 4,09,970

D
Rs. 4,65,000
Question 9
1 / -0

$$6\%$$ debentures account Rs. 3,00,000 debenture interest Rs. 6,000. What amount should be shown in profit & loss account?

A
Rs. 6,000

B
Rs. 12,000

C
Rs. 18,000

D
None of the above

Solution

In accrual basis of Accounting the incomes are recorded when they are earned whether or not they are actually received. So, the interest that needs to be shown in the profit and loss account is 6% of Rs 3,00,000 = Rs 18000. Rs 6000 is received and Rs 12000 is outstanding which will be added to Rs 6,000.
Question 10
1 / -0

Income tax paid in advance should be shown on the ________________.

A
Debit side of profit & loss acount

B
Assets side of the balance sheet

C
Liability side of the balance sheet

D
Credit side of the profit & loss account

Solution

Asset means anything that the company has a right on. Income tax is an obligation that is to be met. Income tax if paid in advance is an obligation paid in advance that means that you pay in advance before it is actually due. Hence, it is an asset for the company.

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Financial Statements of a Company Test 6

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Financial Statements of a Company Test 6

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SHARING IS CARING

Question 1

Extended to 13 months

Extended to 15 months

Extended to 18 months

Extended to 20 months

Solution

Question 2

By deducting the amount from the called up capital

Under the heading Reserves and Surplus

By deducting the amount from the called up capital reserves

By deducting the amount from the shares forfeited account

Solution

Question 3

Reserves and Surplus

Provisions

Current Liabilities

Miscellaneous Items

Solution

Question 4

Absorption

Amalgamation

External Reconstruction

Internal Reconstruction

Solution

Question 5

Assets side of the balance sheet

Liability side of the balance sheet

Credit side of profit & loss account

Debit side of profit & loss account

Solution

Question 6

in profit & loss account

in profit & loss appropriation account

on the assets side of balance sheet

on the liability side of balance sheet

Solution

Question 7

Secured loans

Unsecured loans

Current Liabilities

None of the above

Solution

Question 8

Rs. 4,10,000

Rs. 4,10,025

Rs. 4,09,970

Rs. 4,65,000

Question 9

Rs. 6,000

Rs. 12,000

Rs. 18,000

None of the above

Solution

Question 10

Debit side of profit & loss acount

Assets side of the balance sheet

Liability side of the balance sheet

Credit side of the profit & loss account

Solution

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