DK Goel Solutions Chapter 1 Financial Statements of Companies

Read below DK Goel Solutions for Class 12 Chapter 1 Financial Statements of Companies. These solutions have been designed based on the latest Class 12 DK Goel Accountancy book used by commerce stream students issued for the current year and the questions given in each chapter.

In this chapter, students will understand the different types of financial statements of a company. it is important for the students to get a detailed understanding of different types of statements that are prepared at the end of the accounting period based on which the overall financial position of a company is understood. these financial statements are being used by people who run the company as well as various other stakeholders. students should understand this chapter very carefully as this will help them in long run.

The chapter contains a lot of questions which can be very helpful for Class 12 commerce students of Accountancy and will also help build strong concepts which will be really helpful in your career. These solutions are free and will help you to prepare for Class 12 Accountancy. Just scroll down and read through the answers provided below

Financial Statements of Companies DK Goel Class 12 Accountancy Solutions

Short Answer Questions

Question 1 Vikas Ltd. has an authorized capital of Rs. 40,00,000 divided into Equity Shares of Rs. 10 per share. The company invited applications for 3,00,000 equity shares. The amount was payable as follows:
On Application Rs. 3, On Allotment Rs. 5 and On Final Call Rs. 2.
The public applied for 2,80,000 shares and all the money was duly received. Show how Share Capital will appear in the Balance Sheet of the Company. Also prepare notes to accounts.
Solution 1

Point for Students:-
As per Section 2(41) of the Companies Act, 2013, all companies are required to have a uniform financial year which shall be a period from 1st April to 31st March every year. Only companies which are a holding or subsidiary of a foreign company required to follow different financial year for the purpose of consolidation of its accounts outside India may apply to the Tribunal for a different financial year.

Question 2. MN Ltd. has an authorized capital of Rs. 50,00,000 divided into equity shares of Rs. 10 per share. The company invited applications for 3,00,000 shares. Applications for 2,75,000 shares were received. All calls were made and were duly received except the final call of Rs. 3 per shares on 5,000 shares. 4,000 of the share on which the final call was not received were forfeited. Show how share capital will appear in the balance sheet of the company. Also prepare notes to accounts.
Solution 2

Point for Students:-
As per Section 2 (40) of the Companies Act, 2013, ‘Financial Statements’ in relation to a Company, include the following:
(i) A balance sheet as at the end of the financial year.
(ii) A statement of profit and loss for the financial year.
(iii) Cash flow statement for the financial year.
(iv) A statement of changes in equity, if applicable.
(v) Explanatory notes.

Question 3. On 1st April, 2018, Nissan Ltd. was formed with an authorized capital of Rs. 60,00,000 divided into 6,00,000 equity shares of Rs. 10 per share. The Company issued prospectus inviting applications for 4,50,000 shares. The issue price was payable as under:

Rs.

On Application 3

On Allotment 4

On Call Balance

Issue was fully subscribed and the company allotted shares to all the applicants.
The company did not make the call during the year. All money due on allotment was duly received except on 2,000 shares.
Show the shares Capital in the Balance Sheet of the company as at 31st March, 2019.
Solution 3

Point for Students:-
Financial statements are related to past period and hence are historical documents. They are expressed in terms of money. Financial statement shows profitability through Statement of Profit and Loss and financial position through Balance Sheet.

Question 4. On 1st April, 2018, Ernakulam Textiles Ltd. was formed with an authorizes capital of Rs. 75,00,000 divided into equity shares of Rs. 10 per share. The company invited applications for 5,00,000 shares. Amount was payable as under:

Issue was fully subscribed and allotment was made. All money due on allotment was received except from one shareholder holding 500 shares. The company did not make the call during the year.
The company also issued 40,000 shares of Rs. 10 per share fully paid up to vendors for purchase of building.
Show the Share Capital in the Balance Sheet of the Company as at 31st March, 2019 and also prepare notes to accounts.
Solution 4

Question 5. On 1st April, 2018 X Ltd. has a debit balance of Rs. 3,00,000 in reserves and Surplus as Balance of Statement of Profit & Loss. It earned a profit of Rs. 5,00,000 for the year ended 31st March, 2019. How would you show these items in the Balance Sheet and notes to accounts?
Solution 5

Question 6. Y Ltd. has the following balance on 1st April, 2018:

During the year ended 31st March, 2019, it incurred a loss of Rs. 2,60,000. How would you should these items in the Balance Sheet and notes to
accounts?
Solution 6

Question 7 Z Ltd. has the following balances on 1st April, 2018:
During the year ended 31st March, 2019, it incurred a loss of Rs. 7,10,000. Show how these items will appear in the Balance Sheet and notes to accounts?
Solution 7

Question 8 Operating Cycle and the period when payment is made is given below. How will you classify the liability?

Point of Student:-
As per Schedule-III: “An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Where the normal operating cycle cannot be identified, it is assumed to have duration of 12 months.”

Question 9 State the major heads under which the item appearing on the equity and liabilities side of a companies’ balance sheet are classified.
Solution 9

DK Goel Solutions Chapter 1 Financial Statements of Companies

Point for Students:-

There is distinction between ‘Reserves’ and ‘Provision’. Reserves means accumulated profits and it is created to strengthen the financial position of the Company and to meet unforeseen liabilities and losses.

‘Provision’ is an amount provided for any known liability whose amount as yet is uncertain. Provision is made to meet a specific liability of which the amount cannot be determined with substantial accuracy. Provision is also made for known losses such as ‘Provision for Depreciation’.

Question 10 How will you classify the following in a Company’s the following in a company’s Balance sheet?
(i) Reserve and Surplus;
(ii) Money received against share warrants.
Solution 10 Both will be classified under ‘Shareholder’s Funds’.

Question 11 A (new) How would you disclose the following items in the Balance Sheet of a Limited Company?
(i) Outstanding Salary
(ii) Bank Balance
(iii) Unpaid Matured Deposits
(iv) Preliminary Expenses
(v) Bills Payable
Solution A 11 (new) (i) Outstanding Salary shows in Current Liabilities under Other Current Liabilities.
(ii) Bank Balance shows in Current Assets under Cash and Cash Equivalents.
(iii) Unpaid Matured Deposits shows in Current Liabilities under Other Current Liabilities.
(iv) Preliminary Expenses not shown in balance sheet.
(v) Bills Payable shows in Current Liabilities under Trade Payables.

Question 11 B (new) Under what head the following items are shown in the Balance Sheet of a Company?
(i) Patents and Trade Marks
(ii) Income Received in Advance
(iii) Debentures issued by the Company
(iv) Stores and Spare-parts
(v) Motor Vehicles
(vi) Forfeited Shares Account
(vii) Government Securities
(viii) Uncalled Liabilities on Partly paid shares.
Solution 11 i) Patents and Trade Marks shows in Non-current assets under fixed assets (intangible assets).
(ii) Income Received in Advance shows in Current liabilities under Other current Liabilities.
(iii) Debentures issued by the Company shows in Non-Current Liabilities under Long-term Borrowing.
(iv) Stores and Spare-parts shows in Current Assets under Inventories.
(v) Motor Vehicles show in Non-Current Assets under Fixed Assets (Tangible Assets).
(vi) Forfeited Shares Account shows in Shareholder’s Fund added to Subscribed Capital.
(vii) Government Securities shows in Non-Current Assets under Non-Current Investments.
(viii) Uncalled Liabilities on Partly paid shares shows in Commitments in notes to accounts.

Question 11 Name the sub-headings under which Current Liabilities shall be classified in a Company’s Balance Sheet.
Solution 11 The sub-headings under which Current Liabilities shall be classified in a Company’s Balance Sheet are:
i. Short term Borrowing
ii. Trade Payable
iii. Other Current Liability
iv. Short Term Provision

Question 12 (new) Under which major headings and sub-headings will the following items be shown in the balance sheet of a company as per schedule III part I of the companies Act, 2013;
i. Balance of the Statement of Profit and Loss
ii. Loan of Rs. 1,00,000 payable after three years
iii. Short term deposits payable on demand
iv. Loose tools
v. Trade mark
vi. Land
vii. Cash at bank
viii. Trade payable
Solution 12 (new)

Question 12 Under what heads will you classify the following items on the equity and liability side of the Balance sheet of a limited company;
i. Unclaimed Dividend
ii. Proposed dividend
iii. Security Premium Reserve
iv. Share forfeited Account
v. Public Deposits
vi. Debentures
vii. Bills discounted but not matured
Solution 12 (i) Items:- Unclaimed Dividend
Major-Heading:- Current liabilities
Sub-Heading:- Other Current Liabilities

(ii) Items:- Proposed dividend
Major-Heading:- Contingent Liabilities in notes to accounts

(iii) Items:- Security Premium Reserve
Major-Heading:- Shareholder’s Fund
Sub-Heading:- Reserve and Surplus

(iv) Items:- Share forfeited Account
Major-Heading:- Shareholder’s Fund added to ’Subscribed Capital

(v) Items:- Public Deposits
Major-Heading:- Non-Current Liabilities
Sub-Heading:- Long -Term Liabilities

(vi) Items:- Debentures
Major-Heading:- Non-Current Liabilities
Sub-Heading:- Long Term provision

(vii) Items:- Bills discounted but not matured
Major-Heading:- Contingent Liabilities in notes to accounts

Question 13 (new) Under what head the following are shown in a Company’s balance sheet?
i. Public deposits
ii. Sinking fund
iii. Office equipment
iv. Prepaid expenses
v. Outstanding salaries
vi. Motor car
Solution 13 (new)

Question 13 Under which main head and sub-heads the following items on the Equity and Liabilities side of the balance sheet of a company will be presented:
i. Shares options outstanding Account.
ii. Excess Application money due for refund.
iii. GST payable.
iv. Debenture redemption Reserve.
v. Premium Payable on Redemption of debentures.
vi. Provision for Gratuity
vii. Outstanding Expenses.
Solution 13 (i) Items:- Shares options outstanding Account
Major-Heading:- Shareholder’s Fund
Sub-Heading:- Reserve and Surplus

(ii) Items:- Excess Application money due for refund
Major-Heading:- Current liabilities
Sub-Heading:- Other Current Liabilities

(iii) Items:- GST payable
Major-Heading:- Current Liabilities
Sub-Heading:- Other Current Liabilities

(iv) Items:- Debenture redemption
Major-Heading:- Reserve Shareholder’s Fund
Sub-Heading:- Reserve and Surplus

(v) Items:- Premium Payable on Redemption of debentures
Major-Heading:- Non-Current Liabilities
Sub-Heading:- Other Long -Term Liabilities

(vi) Items:- Provision for Gratuity
Major-Heading:- Non-Current Liabilities
Sub-Heading:- Long Term provision

(vii) Items:- Outstanding Expenses
Major-Heading:- Current Liabilities
Sub-Heading:- Other Current Liabilities

Question 14 (new) Name the major head and sub- head under which the following items will be presented in the balance sheet of a company as per schedule III part I of the companies Act, 2013?
i. Loose tools
ii. Unpaid dividend
iii. Copyrights and patents
iv. Land and building
Solution 14 (new)

Question 14 Operating Cycle and the period when payment is received is given below. How will you classify the assets?

Point of Student:-

As per Schedule-III: “An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. Where the normal operating cycle cannot be identified, it is assumed to have duration of 12 months.”

Question 15 (new) Classify the following items under Major Head and Sub- Head in the Balance Sheet of a company as per schedule III part I of the companies Act, 2013/
i. Capital Work in Progress
ii. Provision for Warranties
iii. Income received in advance
iv. Capital Advances
v. Capital Reserve
vi. Bank Overdraft
Solution 15 (new)

Question 15. State the major heads (or line items) under which the items appearing on the assets side of a company’s Balance sheet are classified.

Point for Students:-
As per Section 2 (40) of the Companies Act, 2013, ‘Financial Statements’ in relation to a Company, include the following:

(i) A balance sheet as at the end of the financial year.
(ii) A statement of profit and loss for the financial year.
(iii) Cash flow statement for the financial year.
(iv) A statement of changes in equity, if applicable.
(v) Explanatory notes.

Question 16 (new) Under which major sub-heading will the following items be placed in the Balance Sheet of a company as per schedule III part I of the companies Act, 2013:
i. Capital Reserve
ii. Bonds
iii. Loans repayable on demand
iv. Vehicles
v. Goodwill
vi. Loose tools
Solution 16 (new)

Question 16. Name the sub-heading under which Current Assets shall be classified in a Company’s Balance Sheet.
Solution 16. Sub-Headings Under Current Assets: Current Investment
Inventories
Trade receivables
Cash and cash equivalents
Short-term loans and advances

Question 17 A (new) Under what head the following are recorded in a Company’s Financial Statement?
i. Computer Software
ii. Bills Receivable
iii. Interest Accrued and Due on Debentures
iv. Interest Accrued on Investments
v. Calls in Arrears
Solution 17 A (new)

Question 17 B (new) Under what headings will you show the following items in the Financial Statements of a company:
i. Authorized Capital
ii. Share Forfeiture Account
iii. Capital Reserve
iv. Secured Debentures
v. Provision for Tax
Solution 17 B (new)

Question 17. Under what heads the following items on the Assets side of the Balance sheet of a company will be presented;

i. Sundry Debtors
ii. Loose Tools
iii. Live Stock
iv. Goods in Transit
v. Prepaid Expenses
Solution 17

Point for Students:-

As per Section 2(41) of the Companies Act, 2013, all companies are required to have a uniform financial year which shall be a period from 1^st April to 31^st March every year. Only companies which are a holding or subsidiary of a foreign company required to follow different financial year for the purpose of consolidation of its accounts outside India may apply to the Tribunal for a different financial year.

Question 18 (new) Give the headings under which the following items will be shown in a Company’s Balance sheet :
i. Mining Rights
ii. Debtors
iii. Interest on Calls in Advance
iv. Working in progress
v. Mortgage Loan
vi. Bonds
Solution 18 (new)

Question 18 Under which head following items of a non-financial company will be classified:
i. Sales
ii. Interest on Loans given
iii. Divided income
iv. Sale of miscellaneous items
v. Refund of income tax
vi. Revenue from services rendered.
Solution 18
Revenue from Operations:
Sales
Revenue from services rendered

Other Income:
Interest on Loans given,
Divided income,
Sale of miscellaneous items
Refund of income tax.

Question 19 (new) Under what heading will you show the following items in the Balance Sheet of a company:
i. Credit Balance of Statement of profit & loss
ii. Discount on issue/loss on issue of debentures (to be amortized in the next 12 months)
iii. Employees earned leave payable on retirement
iv. Provision for provident fund scheme
v. Provision for employee benefits
vi. Provision for doubtful debts
vii. Contracts remaining to be executed
Solution 19 (new)

Question 19 Under which head following items of a financial company will be classified:Revenue from serviced rendered
Interest on loan given
i. Dividend income
ii. Refund on income tax
iii. Sale of miscellaneous items.
Solution 19
i. Revenue from Operations:
ii Revenue from serviced rendered
iii. Interest on loan given
vi. Dividend income

Other Income:
Refund on income tax
Sale of miscellaneous items

Question 20 (new) How will you show the following items in the balance sheet of a company:
i. Stores and spares
ii. Debentures due for redemption
iii. Live stock
iv. Intellectual property rights
v. Advance from customers
vi. Advance to suppliers
vii. Commission received in Advance
Solution 20 (new)

Question 20 Compute Revenue from Operations, Other Income and Total Revenue for a Manufacturing firm from the following information:
Sale of products Rs. 35,00,000; Sales Returns Rs. 50,000; Sale of Services Rs. 2,00,000; Sale of scrap Rs. 70,000; Sale of Miscellaneous items Rs. 6,000; Dividend Received Rs. 25,000.

Question 20 (new) Under which of the heads will the following items be shown, while preparing the balance sheet of a company, as per provisions of Companies Act, 2013, as contained in Schedule III?
Rs.
i. Preliminary Expenses 1,40,000
ii. Discount on Issue of Debentures 10,000
iii. 10% debentures 1,90,000
iv. Stock -in -trade 40,000
v. Cash at Bank 35,000
vi. Bills Receivable 12,000
vii. Goodwill 20,000
viii. Loose Tools 12,000
ix. Horses and Carts 22,000
x. Motor Truck 75,000
xi. Provision for Taxation 6,000
xii. Sundry Creditors 30,000
Solution 21 (new)

Question 21 Compute Revenue from Operations, Other Income and Total Revenue for a banking Company from the following information:
Interest Earned Rs. 62,00,000; Dividend received Rs. 6,20,000; Amount Received from sale of building Rs. 20,00,000 (Book Value Rs. 8,00,000); Amount received from sale of investments Rs. 5,00,000 (Book value Rs. 3,20,000); Refund of Income tax Rs. 10,000.
Solution 21

Question 22 (new) How would you show the following items in a company’s Balance Sheet as at 31st March, 2017:
Particular Rs.
i. Public Deposits 4,00,000
ii. Outstanding Expenses 10,000
iii. Calls in Advance 25,000
iv. Provision for Employee benefits (Maturing within 12 months) 20,000
v. Provision for taxation 1,50,000
Solution 22 (new)

Question 22 Compute Cost of Materials consumed from the following:
Opening Inventory of Materials Rs. 4,20,000; Materials purchased Rs. 20,00,000; and closing Inventory of Materials Rs. 3,80,000.
Solution 22

Question 23 (new) How would you show the following items in a Company’s Balance sheet”
Particular Rs.
i. Vehicles 50,00,000
ii. Office Equipment 10,00,000
iii. Trade Marks 2,00,000
iv. Computer Software 6,00,000
Solution 23 (new)

Question 23 Prepare notes to Accounts for change in inventories for the year ended 31^st march, 2018 from the following information and determine the amount that will be shown in the Statement of profit and loss:

Question 24 (new) Show the following items in a company’s Balance Sheet as at 31st, March,2017:
Particular Rs.
i. Deferred Tax Assets 2,00,000
ii. Loose Tools 1,20,000
iii. Goods in Transit 5,00,000
iv. Prepaid Expenses 15,000
v. Interest Accrued on investments 10,000
Solution 24 (new)

Question 25 (new) Under which head following items of a non-financial company will be classified:
i. Sales
ii. Interest on Loans given
iii. Divided income
iv. Sale of miscellaneous items
v. Refund of income tax
vi. Revenue from services rendered.
Solution 25 (new) Revenue from Operations: Sales and Revenue from services rendered
Other Income: Interest on Loans given, Divided income, Sale of miscellaneous items and Refund of income tax.

Question 25 Out of the following identity the item that are shown in the Notes to Accounts on employee benefit expenses:
i. Salaries
ii. Medical expenses
iii. Conveyance expenses
iv. Gratuity paid
v. Business promotion expenses
iv. Contribution on provident fund.
Solution 25
Employee Benefit Expenses:
i. Salaries
ii. Medical Expenses
iv. Gratuity paid
vi. Contribution on provident fund.

Point for Students:-
Financial statements are related to the past periods and hence are historical documents. They are expressed in terms of money. The financial statement shows profitability through Statement of Profit and Loss and financial position through Balance Sheet.

Question 26 (new) Under which head following items of a financial company will be classified:
i. Revenue from serviced rendered
ii. Interest on loan given
iii. Dividend income
iv. Refund on income tax
v. Sale of miscellaneous items.
Solution 26 (new) Revenue from Operations: Revenue from serviced rendered, Interest on loan given, and Dividend income
Other Income: Refund on income tax and Sale of miscellaneous items.

Question 26 From the following information for the year ended 31^st March 2015, prepare Notes at Accounts on Employee Benefit Expense:

Question 27 (new) Compute Revenue from Operations, Other Income and Total Revenue for a Manufacturing firm from the following information:
Sale of products Rs. 35,00,000; Sales Returns Rs. 50,000; Sale of Services Rs. 2,00,000; Sale of scrap Rs. 70,000; Sale of Miscellaneous items Rs. 6,000; Dividend Received Rs. 25,000.
Solution 27 (new)

Question 27 Out of the following identify the items to be shown in the Notes of Accounts on Finance Costs:Interest paid in bank overdraft
i. Interest paid on borrowings
ii. Interest received on term deposits
iii. Deposit on issue of debentures written off
iv. Interest paid on term loan
Solution 27
The following items shown in the Notes of Accounts on Finance Costs:
i. Interest paid in bank overdraft
ii. Interest paid on borrowings
iii. Deposit on issue of debentures written off
iv. Interest paid on term loan

Point for Students:-
Financial statements are related to the past periods and hence are historical documents. They are expressed in terms of money. The financial statement shows profitability through the Statement of Profit and Loss and financial position through the Balance Sheet.

Question 28 (new) Compute Revenue from Operations, Other Income and Total Revenue for a banking Company from the following information:
Interest Earned Rs. 62,00,000; Dividend received Rs. 6,20,000; Amount Received from sale of building Rs. 20,00,000 (Book Value Rs. 8,00,000); Amount received from sale of investments Rs. 5,00,000 (Book value Rs. 3,20,000); Refund of Income tax Rs. 10,000.
Solution 28 (new)

Question 28 From the following information for the year ended 31^st march, 2018, prepare Notes of Accounts on Finance costs:

Question 29 (new) Compute Cost of Materials consumed from the following:
Opening Inventory of Materials Rs. 4,20,000; Materials purchased Rs. 20,00,000; and closing Inventory of Materials Rs. 3,80,000.
Solution 29 (new) Cost of Material Consumed: Rs.
Opening Inventory: Materials 4,20,000
Add: Material Purchased 20,00,000
24,20,000
Less: Closing Inventory of Material 3,80,000
20,40,000

Question 29 Identify which the following items will be shown in the notes of accounts on ‘other expense’.
i. Consumptions of loose tools;
ii. Staff welfare expenses;
iii. Wages
iv. Courier expenses
v. Carriage outwards
vi. Discount allowed
vii. Bank charges
viii. Rent for warehouse
ix. Depreciation on machinery
x. Gratuity paid
XI. Goodwill has written off
Solution 29 Below are the items will be shown in the notes of accounts on ‘other expense’:-
i. Consumptions of loose tools
iv. Courier expenses
v. Carriage outwards
vi. Discount allowed
vii. Bank Charges
viii. Rent for Warehouse

Question 30 (new) Prepare notes to Accounts for change in inventories for the year ended 31st march, 2018 from the following information and determine the amount that will be shown in the Statement of profit and loss:
Inventory on 1-04-2017 Inventory on 31-03-2018
Rs. Rs.
Stock in Trade 4,00,000 3,60,000
Finished Good 7,00,000 10,00,000
Work-in-Progress 4,50,000 5,80,000
Solution 30 (new)

Rs. 3,90,000 will be shown in the Statement of profit and Loss Against change in inventories.

Question 30 Under which line item (major head) of the statement of profit and loss of a company following items will appear:
i. Loss processing charges
ii. Sale of products
iii. Leave encashment expenses;
iv. Courier expenses
v. Computer software amortized
vi. Interest on cash credit
vii. Materials purchased.
Solution 30 (i) Items:- Loss processing charges
Major-Heading:- Finance Costs

(ii) Items:- Sale of products
Major-Heading:-Revenue from Operations

(iii) Items:- Leave encashment expenses
Major-Heading:-Employee Benefit Expenses

(iv) Items:- Courier expenses
Major-Heading:-Other Expenses

(v) Items:- Computer software amortized
Major-Heading:-Depreciation and amortization exp.

(vi) Items:- Interest on cash credit
Major-Heading:-Finance costs

(vii) Items:- Materials purchased
Major-Heading:-Cost of Materials Consumed

Question 31 (new) Compute Coat of Materials Consumed from the following:

Solution 31 (new)

Question 31 State the major head under which the following items will be shown in the statement of profit and loss of a company:
i. Loss on issue of debentures written off
ii. Dividend received
iii. Sale of services
iv. Contribution of gratuity fund
v. Medical expenses
vi. Bank charges
vii. Carriage outwards
viii. Bad-Debts written off.
Solution 31 (i) Item:- Loss on issue of debentures written off
Major Head:- Finance Costs

(ii) Item:- Dividend received
Major Head:- Other Income

(iii) Item:- Sale of services
Major Head:- Revenue from Operations

(iv) Item:- Contribution of gratuity fund
Major Head:- Employee Benefit Expenses

(v) Item:- Medical expenses
Major Head:- Employee Benefit Expenses

(vi) Item:- Bank charges
Major Head:- Other Expenses

(vii) Item:- Carriage outwards
Major Head:- Other Expenses

(viii) Item:- Bad-Debts written off
Major Head:- Other Expenses

Question 32 (new) Out of the following identity the item that are shown in the Notes to Accounts on employee benefit expenses:
i. Salaries
ii. Medical expenses
iii. Conveyance expenses
iv. Gratuity paid
v. Business promotion expenses
vi. Contribution on provident fund.
Solution 32 (new) Employee Benefit Expenses:
i. Salaries
ii. Medical Expenses
iv. Gratuity paid
vi Contribution on provident fund.

Question 32 Under which major head of the statement of profit and loss of a Financial Company the following will appear:
1. Commission paid for deposit mobilization
2 Dividend received
3. Refund of income tax
4. Lease rent
5. Gain on sale of investments;
6. Expenses on employee’s stock option scheme;
7. Audit fee;
8. Premium payable on redemption of debentures written off.
Solution 32 (i) Items:- Commission paid for deposit mobilization
Major-Heading:- Finance Costs

(ii) Items:- Dividend received
Major-Heading:- Revenue from Operations

(iii) Items:-Refund of income tax
Major-Heading:-Other Income

(iv) Items:-Lease rent
Major-Heading:-Other Expenses

(v) Items:-Gain on sale of investments
Major-Heading:-Revenue from Operations

(vi) Items:-Expenses on employee’s stock option scheme
Major-Heading:-Employee Benefit Expenses

(vii) Items:-Audit fee
Major-Heading:-Other Expenses

(viii) Items:-Premium payable on redemption of debentures written off
Major-Heading:-Finance Costs

Question 33 A (new) From the following information for the year ended 31st March 2015, prepare Notes at Accounts on Employee Benefit Expense:

Solution 33 A (new)

Question 33 (A) How would you disclose the following item in the financial statements of a Limited Company?
i. Outstanding salary
ii. Bank balance
iii. Unpaid matured deposits
iv. Preliminary expenses
v. Bills payable
vi Sale of services
vii. Goodwill has written off
viii. Medical Exp.

Solution 33 (A)
1. Outstanding salary: Current Liabilities under other Current Liabilities
2. Bank balance: Current Assets under cash and cash Equivalents.
3. Unpaid matured deposits: Current Liabilities under Other Current Liabilities.
4. Preliminary expenses: Not Shown in Balance Sheet since they are written off in the same year.
5. Bills payable: Current Liabilities under Trade payables
6. Sale of services: Revenue from Operations.
7. Goodwill written off: Depreciation and Amortization Expenses.
8. Medical Expenses: Employee Benefit Expenses.

Question 33 (B) Under what head the following items are shown in the Balance sheet of a company/
i. Patents and Trade Marks
ii. Income Received in Advance
iii. Debentures issued in Advance
iv. Stores and Spare-parts
v. Motor vehicles
vi. Forfeited Shares Account
vii. Government Securities
viii. Uncalled Liabilities on Partly paid shares.
Solution 33 (B) i. Patents and Trade Marks
Major- Heading: Non-Current Assets
Sub-Heading: Fixed Assets- Intangible Assets

ii. Income Received in Advance
Major- Heading: Current Liabilities
Sub-Heading: Other Current Liabilities

iii. Debentures issued in Advance
Major- Heading: Non-Current Liabilities
Sub-Heading: Long Term Borrowings

iv. Stores and Spare-parts
Major- Heading: Current Assets
Sub-Heading: Inventories

v. Motor vehicles
Major- Heading: Non-Current Assets
Sub-Heading: Fixed Assets- Tangible Assets

vi. Forfeited Shares Account
Major- Heading: Shareholder’s Funds; added to ‘Subscribed Capital’

vii. Government Securities
Major- Heading: Non-Current Assets
Sub-Heading: Non-Current Investments

viii. Uncalled Liabilities on Partly paid shares.
Major- Heading: Commitment (to be shown in Notes to Accounts)

Question 34 (new) Out of the following identify the items to be shown in the Notes of Accounts on Finance Costs:
i. Interest paid in bank overdraft
ii. Interest paid on borrowings
iii. Interest received on term deposits
iv. Deposit on issue of debentures written off
v. Interest paid on term loan
Solution 34 (new) Finance Cost:
i. Interest paid in bank overdraft
ii. Interest paid on borrowings
iii. Deposit on issue of debentures written off
iv. Interest paid on term loan

Question 34 Under which major headings and sub-headings will the following items be shown in the balance sheet of a company as per schedule III part I of the companies Act, 2013;
i. Balance of the Statement of Profit and Loss
ii. Loan of Rs. 1,00,000 payable after three years
iii. Short term deposits payable on demand
iv. Loose tools
v. Trade mark
vi. Land
vii. Cash at bank
viii. Trade payable
Solution 34 i) Balance of the Statement of Profit and Loss
Major-Heading:- Shareholder’s Fund
Sub-Heading:- Reserve and Surplus

ii) Loan of Rs. 1,00,000 payable after three years
Major-Heading:- Shareholder’s Fund
Sub-Heading:- Reserve and Surplus

iii) Short term deposits payable on demand
Major-Heading:- Current Liabilities
Sub-Heading:- Short Term Borrowings

iv) Loose tools
Major-Heading:- Current Assets
Sub-Heading:- Inventories

v) Trade mark
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets – Intangible

vi) Land
ajor-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets -Tangible

vii) Cash at bank
Major-Heading:- Current Asset
Sub-Heading:- Cash and Cash Equivalents

viii) Trade Payable
Major-Heading:- Current Liabilities
Sub-Heading:- Trade Payables

Question 35 (new) From the following information for the year ended 31st march, 2018, prepare Notes of Accounts on Finance costs:
Rs.
i. Interest paid on cash credit 2,20,000
ii. Interest paid on debentures 3,50,000
iii. Commitment Charges    20,000
iv. Bank Charges    4,500
v. Interest paid on Public Deposits 80,000
vi. Commission paid for deposit mobilization    16,000
Solution 35

Finance Cost Rs. 6,86,000 (Interest Exp. RS. 6,50,000 plus Other Borrowing Costs Rs. 36,000)

Question 35 Under what head the following are shown in a Company’s balance sheet?
1. Public deposits
2. Sinking fund
3. Office equipment
4. Prepaid expenses
5. Outstanding salaries
6. Motor car
Solution 35 i) Public deposits
Major-Heading:- Non- Current Liabilities
Sub-Heading:- Long Term Borrowings

ii) Sinking fund
Major-Heading:- Shareholder Funds’
Sub-Heading:- Reserve and Surplus

iii) Office equipment
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets-Tangible Assets

iv) Prepaid expenses
Major-Heading:- Current Assets
Sub-Heading:- Other Current Assets

v) Outstanding salaries
Major-Heading:- Current Liabilities
Sub-Heading:- Other Current Liabilities

vi) Motor car
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets-Tangible Assets

Question 36 (new) Identify which the following items will be shown in the notes of accounts on ‘other expense’.
I. Consumptions of loose tools;
II. Staff welfare expenses;
III. Wages
IV. Courier expenses
V. Carriage outwards
VI. Discount allowed
VII. Bank charges
VIII. Rent for warehouse
IX. Depreciation on machinery
X. Gratuity paid
XI. Goodwill written off
Solution 36 (new) Other Expenses:
i. Consumptions of loose tools
iv. Courier expenses
v. Carriage outwards
vi. Discount allowed
vii. Bank Charges
viii. Rent for Warehouse

Question 36 Name the major head and sub- head under which the following items will be presented in the balance sheet of a company as per schedule III part I of the companies Act, 2013?
i. Loose tools
ii. Unpaid dividend
iii. Copyrights and patents
iv. Land and building
Solution 36 i) Loose tools
Major-Heading:- Current Assets
Sub-Heading:- Inventories

ii) Unpaid dividend
Major-Heading:- Current liabilities
Sub-Heading:- Other Current Liabilities

iii) Copyrights and patents
Major-Heading:-Current Assets
Sub-Heading:- Fixed Assets-Intangible Assets

iv) Land and building
Major-Heading:-Non-Current Assets
Sub-Heading:- Fixed Assets-Tangible Assets

Question 37 (new) Under which line item (major head) of the Statement of Profit and Loss of a Company following items will appear:
(i) Loan Processing Charges; (ii) Sale of Products; (iii) Leave Encashment Expenses; (iv) Conveyance Expenses; (v) Computer Software Amortized; (vi) Interest on Cash Credit; (vii) Materials purchased.
Solution 37 (new)

Question 37. Classify the following items under Major Head and Sub- Head in the Balance Sheet of a company as per schedule III part I of the companies Act, 2013/
i. Capital Work in Progress
ii. Provision for Warranties
iii. Income received in advance
iv. Capital Advances
v. Capital Reserve
vi. Bank Overdraft
Solution 37 i) Capital Work in Progress
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets

ii) Provision for Warranties
Major-Heading:- Non-Current liabilities
Sub-Heading:- Long Term Provision

iii) Income received in advance
Major-Heading:- Current Liabilities
Sub-Heading:- Other Current Liabilities

iv) Capital Advances
Major-Heading:- Non-Current Assets
Sub-Heading:- Long Term Loan and Advances

v) Capital Reserve
Major-Heading:- Shareholder’s Find
Sub-Heading:- Reserve and Surplus

vi) Bank Overdraft
Major-Heading:- Current Liabilities
Sub-Heading:- Short Term Borrowings

Question 38 (new) State the major head under which the following items will be shown in the statement of Profit and loss of a Company:
(i) Loss on issue of Debentures written off; (ii) Dividend received; (iii) Sale of Services; (iv) Contribution to gratuity fund; (v) Medical Expenses; (vi) Bank Charges (vii) Carriage Outward; (viii) Bad-Debts written off.
Solution 38 (new)

Question 38. Under which major sub-heading will the following items be placed in the Balance Sheet of a company as per schedule III part I of the companies Act, 2013:
i. Capital Reserve
ii. Bonds
iii. Loans repayable on demand
iv. Vehicles
v. Goodwill
vi. Loose tools
Solution 38 i) Capital Reserve
Sub-Heading:- Reserve and Surplus

ii) Bonds
Sub-Heading:- Long term Borrowing

iii) Loans repayable on demand
Sub-Heading:- Short term borrowing

iv) Vehicles
Sub-Heading:- Fixed Assets- Tangible Assets

v) Goodwill
Sub-Heading:- Fixed Assets -Intangible Assets

vi) Loose tools
Sub-Heading:- Inventories

Question 38 A (new) The following balance are supplied, on the basis of which you are required to show the major appropriate heads under which the items given below will appear in the balance sheet of Veekay Ltd. as on 31st March 2017:
Rs.
i. Plant and Machinery 5,60,000
ii. Building 10,00,000
iii. Equity Share Capital (Authorized) 20,00,000
iv. Equity shares of Rs, 100 each Rs. 70 called and paid up 14,00,000
v. 10% Debentures 55,000
vi. Furniture and Fixtures 15,000
vii. Long term bank loan (secured) 1,25,000
Solution 39 A (new)

Question 39 (A) Under what head the following are recorded in a Company’s Financial Statement?
i. Computer Software
ii. Bills Receivable
iii. Interest Accrued and Due on Debentures
iv. Interest Accrued on Investments
v. Calls in Arrears
vi. Discount on Issue of Debentures written off
vii. Fees received for arranging loans
viii. Telephone and Internet Exp.
Solution 39 (A) i) Computer Software
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets-Intangible Assets

ii) Bills Receivable
Major-Heading:- Current Assets
Sub-Heading:- Trade Receivables

iii) Interest Accrued and Due on Debentures
Major-Heading:- Current Liabilities
Sub-Heading:- Other Current Liabilities

iv) Interest Accrued on Investments
Major-Heading:- Current Assets
Sub-Heading:- Other Current Assets

v) Calls in Arrears
Major-Heading:- Deducted from Subscribed but not fully paid Capital under the head ‘Shareholder’s Funds’

vi) Discount on Issue of Debentures written off
Major-Heading:- Financial Costs

vii) Fees received for arranging loans
Major-Heading:- Other Incomes

viii) Telephone and Internet Exp.
Major-Heading:- Other Expenses

Question 39 (B) Under what headings will you show the following items in the Financial Statements of a company:
i. Authorized Capital
ii. Share Forfeiture Account
iii. Capital Reserve
iv. Secured Debentures
v. Provision for Tax
vi. Trade Payable written back
vii. Loan Processing Charges
Solution 39 (B) (i) Authorized Capital
Heading:- Shareholder’s Fund under Share Capital to be shown only in the notes to Accounts

(ii) Share Forfeiture Account
Heading:- Shareholder’s Fund Added to ‘Subscribed Capital’

(iii) Capital Reserve
Heading:- Shareholder’s Fund under reserve and Surplus

(iv) Secured Debentures
Heading:- Non-Current Liabilities under Long Term Borrowing

(v) Provision for Tax
Heading:- Current Liabilities Under Short Term Provision

(vi) Trade Payable written back
Heading:- Other Income

(vii) Loan Processing Charges
Heading:- Finance Costs

Question 40 (new) State any five items which are shown under the heading ’Reserve and Surplus’ in the Balance Sheet of a company as per schedule III part -I of the Companies Act, 2013
Solution 40 (new) These five items shown under Reserve and Surplus are:
i. Capital Reserves;
ii. Securities Premium Reserve;
iii. Debenture Redemption Reserve;
iv. Revaluation Reserve;
v. Capital Redemption Reserve

Question 40 Give the headings under which the following items will be shown in a Company’s Balance sheet :
i. Mining Rights
ii. Debtors
iii. Interest on Calls in Advance
iv. Working in progress
v. Mortgage Loan
vi. Bonds
Solution 40 i) Mining Rights
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets-Intangible Assets

ii) Debtors
Major-Heading:- Current Assets
Sub-Heading:- Trade Receivables

iii) Interest on Calls in Advance
Major-Heading:- Current Liabilities
Sub-Heading:- Other Current Liabilities

iv) Working in progress
Major-Heading:- Current Assets
Sub-Heading:- Inventories

v) Mortgage Loan
Major-Heading:- Non-Current Liabilities
Sub-Heading:- Long-term Borrowings

vi) Bonds
Major-Heading:- Non-Current Liabilities
Sub-Heading:- Long term Borrowings

Question 41 (new) Under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III Part I of the Companies Act, 2013?
i. Loans provided repayable on demand
ii. Goodwill
iii. Copyrights and Patents
iv. Cheques
v. General Reserve
vi. Goods acquired for trading and
vii. 9% Debentures repayable after three years
Solution 41 (new)

Question 41 Under what heading will you show the following items in the Balance Sheet of a company:
i. Credit Balance of Statement of profit & loss
ii. Discount on issue/loss on issue of debentures (to be amortized in the next 12 months)
iii. Employees earned leave payable on retirement
iv. Provision for provident fund scheme
v. Provision for employee benefits
vi. Provision for doubtful debts
vii. Contracts remaining to be executed
Solution 41 i) Credit Balance of Statement of profit & loss
Major-Heading:- Shareholder’s Fund
Sub-Heading:- Reserve & Surplus

ii) Discount on issue/loss on issue of debentures (to be amortized in the next 12 months)
Major-Heading:- Current Assets
Sub-Heading:- Other Current Assets

iii) Employees earned leave payable on retirement
Major-Heading:- Non-Current Liabilities
Sub-Heading:- Long Term Provision

iv) Provision for provident fund scheme
Major-Heading:- Non- Current Liabilities
Sub-Heading:- Long term provision

v) Provision for employee benefits
Major-Heading:- Current Liabilities
Sub-Heading:- Short Term Provision

vi) Provision for doubtful debts
Major-Heading:- Current Liabilities
Sub-Heading:- Short Term Provision

vii) Contracts remaining to be executed
Major-Heading:- Commitment (it is shown in Notes to Accounts)

Question 42 (new) Name any two items that are shown under the head ‘other current liabilities’ and any two items that are shown under the head ’other current assets’ in the balance sheet of a company as per schedule III of the companies Act, 2013.
Solution 42 (new) Other Current Assets Other Current Liabilities
Unpaid dividend Prepaid expenses
Interest accrued and due Accrued income
Income received in advance Advance taxes
Calls in Advance

Question 42. How will you show the following items in the balance sheet of a company:
i. Stores and spares
ii. Debentures due for redemption
iii. Live stock
iv. Intellectual property rights
v. Advance from customers
vi. Advance to suppliers
vii. Commission received in Advance
Solution 42 i) Stores and spares
Major-Heading:- Current Assets
Sub-Heading:- Inventories

ii) Debentures due for redemption
Major-Heading:- Current Liabilities
Sub-Heading:- Other Current Liabilities

iii) Live stock
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets-Tangible Assets

iv) Intellectual property rights
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets-Intangible Assets

v) Advance from customers
Major-Heading:- Current Liabilities
Sub-Heading:- Other Current Liabilities

vi) Advance to suppliers
Major-Heading:- Current Assets
Sub-Heading:- Other Current Assets

vii) Commission received in Advance
Major-Heading:- Current Liabilities
Sub-Heading:- Other Current Liabilities

Question 43 (new) Under which major headings and sub- headings the following items will be shown in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013?
i. Bank overdraft
ii. Draft in hand
iii. Trade Marks
iv. Long-Term Provision
v. Calls in Advance
vi. Interest on Calls in Advance
Solution 43 (new)

Question 43 The following balance are supplied, on the basis of which you are required to show the major appropriate heads under which the items given below will appear in the balance sheet of Veekay Ltd. as of 31st March 2017:

Solution 43
i) Plant and Machinery
Major-Heading:- Non-Current Assets

ii) Building
Major-Heading:- Non-Current Assets

iii) Equity Share Capital (Authorized)
Major-Heading:- Shareholder’s Fund

iv) Equity shares of Rs, 100 per share Rs. 70 called and paid up
Major-Heading:- Shareholder’s Fund

v) 10% Debentures
Major-Heading:- Non-Current Liabilities

vi) Furniture and Fixtures
Major-Heading:- Non-Current Assets

vii) Long term bank loan (secured)
Major-Heading:- Non-Current Liabilities

Question 44 (new) How will you show the following in the Balance Sheet of a Company as at 31st March, 2020:
60,000, 8% Debentures of Rs. 100 each redeemable in four equal instalments beginning 1st January, 2021.
Solution 44 (new) Rs. 45,00,000 as Long term Borrowings
Rs. 15,00,000 as Other Current Liabilities

Question 44 State any five items which are shown under the heading ’Reserve and Surplus’ in the Balance Sheet of a company as per schedule III part -I of the Companies Act, 2013.
Solution 44 These five items shown under Reserve and Surplus are:
i. Capital Reserves;
ii. Capital Redemption Reserve
iii. Securities Premium Reserve;
iv. Debenture Redemption Reserve;
v. Revaluation Reserve;

Point for Students:-
Share Options Outstanding Account: It is a form of employee compensation wherein employees are offered an option to apply and get allotment of Company’s shares at a future date at a specified price which is usually sufficiently below the market price of the share.

Question 45 (new) Under which major head/sub-head will the following items be presented in the Balance Sheet of a company as per Schedules III, part I of the Companies Act, 2013?
(i) Computer software
(ii) Calls-in-advance
(iii) Outstanding salary
(iv) Securities Premium Reserve
(v) Patents
(vi) Interest accrued on Investment
Solution 45 (new)

Question 45 Under which of the heads will the following items be shown, while preparing the balance sheet of a company, as per provisions of Companies Act, 2013, as contained in Schedule III?

Solution 45 i) Preliminary Expenses
Major-Heading:- Not shown in the Balance Sheet as these expenses are written off in the same year.

ii) Discount on Issue of Debentures
Major-Heading:- Current/Non-Current Assets
Sub-Heading:- Other Current/Non-Current Assets

iii) 10% debentures
Major-Heading:- Non-Current Liabilities
Sub-Heading:- Long Term Borrowing

iv) Stock -in -trade
Major-Heading:- Current Assets
Sub-Heading:- Inventories

v) Cash at Bank
Major-Heading:- Current Assets
Sub-Heading:- Cash and Cash Equivalents

vi) Bills Receivable
Major-Heading:- Current Assets
Sub-Heading:- Trade Receivables

vii) Goodwill
Major-Heading:- Non- Current Assets
Sub-Heading:- Fixed Assets-Intangible Assets

viii) Loose Tools
Major-Heading:- Current Assets
Sub-Heading:- Inventories

ix) Horses and Carts
Major-Heading:- Non- Current Assets
Sub-Heading:- Fixed Assets-Tangible Assets

x) Motor Truck
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets-Tangible Assets

xi) Provision for Taxation
Major-Heading:- Current Liabilities
Sub-Heading:- Short Term Provisions

xii) Sundry Creditors
Major-Heading:- Current Liabilities
Sub-Heading:- Trade Payables

Question 46 How would you show the following items in a company’s Balance Sheet as at 31st March, 2017:

Question 47 How would you show the following items in a Company’s Balance sheet”

Point for Students:-
There is distinction between ‘Reserves’ and ‘Provision’. Reserves means accumulated profits and it is created to strengthen the financial position of the Company and to meet unforeseen liabilities and losses.
‘Provision’ is an amount provided for any known liability whose amount as yet is uncertain. Provision is made to meet a specific liability of which the amount cannot be determined with substantial accuracy. Provision is also made for known losses such as ‘Provision for Depreciation’.

Question 48 Show the following items in a company’s Balance Sheet as at 31st, March,2017:

Question 49 Show the following items in the Balance Sheet of Panjim fruits Ltd. as at 31st March 2017:

Half Year’s interest on Public Deposits has not yet been paid

Solution 49 Long Term Borrowings RS. 60,00,000 Other Current liabilities Rs. 25,75,000.

Question 50 Under which major head of statement of profit and loss the following items will be shown:
i. Consumption of Loose Tools
ii. Sale of Services
iii. Trade Marks written off
iv. Trade Payable written off
v. Canteen Expenses
vi. Purchase of Stock in Trade
vii. Courier Charges
viii. Revenue from Project Consultancy
ix. Computer Hiring Charges
x. Commitment Charges
Solution 50 i) Consumption of Loose Tools
Major-Heading:- Other Expenses

ii) Sale of Services
Major-Heading:- Revenue from Operations

iii) Trade Marks written off
Major-Heading:- Depreciation and Amortization Exp.

iv) Trade Payable written off
Major-Heading:- Other Income

v) Canteen Expenses
Major-Heading:- Employee Benefit Expenses

vi) Purchase of Stock in Trade
Major-Heading:- Purchase of stock in Trade

vii) Courier Charges
Major-Heading:- Other Expenses

viii) Revenue from Project Consultancy
Major-Heading:- Other Income

ix) Computer Hiring Charges
Major-Heading:- Other Expenses

x) Commitment Charges
Major-Heading:- Finance Cost

Question 51 Under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III Part I of the Companies Act, 2013?
i. Loans provided repayable on demand
ii. Goodwill
iii. Copyrights and Patents
iv. Cheques
v. General Reserve
vi. Goods acquired for trading and
vii. 9% Debentures repayable after three years
Solution 51 i) Loans provided repayable on demand
Major-Heading:- Current Liabilities
Sub-Heading:- Short-term Borrowing

ii) Goodwill
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets- Intangible Assets

iii) Copyrights and Patents
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets- Intangible Assets

iv) Cheques
Major-Heading:- Current Assets
Sub-Heading:- Cash and Cash Equivalents

v) General Reserve
Major-Heading:- Shareholder’s Fund
Sub-Heading:- Reserves and Surplus

vi) Goods acquired for trading and
Major-Heading:- Current Assets
Sub-Heading:- Inventories

vii) 9% Debentures repayable after three years
Major-Heading:- Non- Current Liabilities
Sub-Heading:- Long–term Borrowing

Question 52 Name any two items that are shown under the head ‘other current liabilities’ and any two items that are shown under the head ’other current assets’ in the balance sheet of a company as per schedule III of the companies Act, 2013.

Solution 52

Question 53 Under which major headings and sub- headings the following items will be shown in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013?
i. Bank overdraft
ii. Draft in hand
iii. Trade Marks
iv. Long-Term Provision
v. Calls in Advance
vi. Interest on Calls in Advance
Solution 53 i) Bank overdraft
Major-Heading:- Current Liabilities
Sub-Heading:- Short-term Borrowing

ii) Draft in hand
Major-Heading:- Current Assets
Sub-Heading:- Cash and Cash Equivalents

iii) Trade Marks
Major-Heading:- Non-Current Assets
Sub-Heading:- Fixed Assets- Intangible Assets

iv) Long-Term Provision
Major-Heading:- Non-Current Liabilities
Sub-Heading:- Long -term provision

v) Calls in Advance
Major-Heading:- Current Liabilities
Sub-Heading:- Other current Liabilities

vi) Interest on Calls in Advance
Major-Heading:- Current Liabilities
Sub-Heading:- Other current liabilit

DK Goel Solutions Class 12th Chapter 1 Financial Statements of a Company

What do you mean by the financial statements of companies?

The company’s financial statement is basically the output of the accounting process and generally designed after the company’s accounting period. The financial statements reveal the company’s financial position and allow them to have a clear picture of the end products of their financial decisions.

What do the financial statements of companies include?

The financial statements of the companies primarily constitute of four fundamental components, which are –
● Balance Sheet or Position Statement of the company
● A statement of profit and loss of the company during the accounting period.
● Notes to Accounts.
● Cash Flow Statement.

What is a balance sheet?

A balance sheet is an official statement that depicts clear information about the assets, liabilities, and equities of a company. It is basically a document that depicts the financial position of the company at a specific time span. The balance sheet is a key element of the financial statement of a company, and it gives an in-depth picture of the company’s financial status.

Write the limitations of financial statements?

Here are some of the limitations of the financial statements –
● Financial Statements only present the quantitative data of the transactions. It does not highlight any qualitative aspect of the transaction like size, quality, or capabilities.
● Financial Statements portray the pre-defined price of the products or services. It fails to quote any modifications in the price. Thereby giving no data about the current price.
● Financial Statements are designed by humans. Therefore, it may contain errors.

State the primary objectives of the financial statements of a company?

Here is the sole objective of the financial statements –
● The financial statement is one of the most reliable sources for companies to understand their financial positions. It periodically supplies the companies with updated financial data.
● It portrays all details about the financial status of the companies, including profitability, liquidity, etc.
● Financial Statements evaluate the estimated earning capacity of the companies.

How are the financial statements important for the shareholders of the company?

Financial Statements are extremely fruitful for the shareholders as it allows them to understand the profit-making capacity of the firm. It supplies them with the most accurate information to grasp the company’s financial status, helping them make better business decisions.

Also refer to TS Grewal Solutions for Class 12

DK Goel Solutions

DK Goel Solutions Chapter 1 Financial Statements of Companies

Financial Statements of Companies DK Goel Class 12 Accountancy Solutions

About Us:

Important Links

Class 11

Class 12