Refer to MCQs for Accountancy Class 12 with Answers Chapter 3 Financial Statements of a Company designed as per the latest syllabus issued by CBSE. All Multiple choice questions have been provided with solutions and have been prepared based on the expected pattern in upcoming board exams

Question. Securities Premium Reserve is shown on the liabilities side in the Balance sheet under the head :
(a) Reserves and Surplus
(b) Current Liabilities
(c) Share Capital
(d) None of these 

Question: Nominal accounts are related to
(a) Expense + Income
(b) Liability
(c) Assets
(d) None of the options

Question. Interest on Loans given by a financial company is shown in the statement of profit and loss as :
(a) Revenue from Operations
(b) Other Income
(c) Sundry Expenses
(d) None of these 

Question: Closing stock is recorded in the
(a) Balance sheet
(b) Profit and loss account
(c) Trial balance
(d) None of the options

Question: Prepaid expenses should appear in
(a) Assets
(b) Liability
(c) Revenues
(d) None of the options

Question. Gain on sale of fixed assets by a financial company is shown in the statement of profit and loss as :
(a) Revenue from Operations
(b) Other Income
(c) Both (a) and (b)
(d) None of these 

Question: Current liabilities do not include
(a) None of the options
(b) Sundry creditors
(c) Bank overdraft
(d) Prepaid insurance

Ques. Which of the following is not the limitation of financial statements?
(a) Ignore qualitative aspects.
(b) Personal bias.
(c) Ignores price level change.
(d) Provide information about the profitability of the business.

Question. From the given items which is a part of Current Liabilities:
(a) Inventories
(b)Trade Payables
(c) Cash and Cash Equivalents
(d)Trade Receivables

Question: Any difference in trial balance transferred to
(a) Suspense A/c
(b) Capital A/c
(c) Current A/c
(d) None of the options

Question: The balance sheet, also called the
(a) Statement of financial position
(b) Profit & Loss Account
(c) Cash Flow
(d) None of the options

Question. Dividend is paid on :
(a) Authorised Capital
(b) Subscribed Capital that is paid up
(c) Issued Capital
(d) None of these 

Question. Carriage Inwards is shown in the statement of profit and loss under :
(a) Cost of materials consumed
(b) Other expenses
(c) Employees benefit expenses
(d) None of these 

Ques. Mining Rights are
(a) Tangible Fixed Assets.
(b) Other Current Liabilities.
(c) Intangible Assets Under Development.
(d) Short-term Borrowings.

Question. Purchase of goods for reselling is shown in the Statement of Profit and Loss under :
(a) Changes in Inventories
(b) Cost of Materials Consumed
(c) Purchase of Stock-in-Trade
(d) None of these 

Question. Revenue from sale of goods manufactured is shown in the statement of profit and loss as :
(a) Revenue from Operations
(b) Other Income
(c) Both (a) and (b)
(d) None of these 

Question: The following is(are) the external source(s) of cash
(a) All of the options
(b) Long terms loans
(c) Issue of new shares
(d) Short term borrowings

Question: The statement which shows the assets and liabilities of a company is known as
(a) Balance sheet
(b) Profit & Loss Account
(c) Trial Balance
(d) None of the options

Question: Net Profit before Taxes – Income Taxes
(a) Net Profit (or Net Loss) and Gross Profit (or Net Loss)
(b) Gross Profit (or Net Loss)
(c) Net Profit (or Net Loss)
(d) None of the options

Question. 6% Debentures appear in a Company’s Balance Sheet under the Sub-head
(a) Long-term Provisions
(b) Long-term Borrowings
(c) Other Current Liabilities
(d) Other Long-term Liabilities

Question: The term current asset doesn t cover
(a) Car
(b) Debtors
(c) Stock
(d) Prepaid expenses

Question: Objectives of analysis and interpretation of financial statements are
(a) All of the options
(b) Progress
(c) Position
(d) Prospects

Question. Which of the following is not a Non-Current Asset?
(a) Fixed Assets
(c) Long-term Loans and Advances
(b) Share Capital
(d) Non-current Investments

Question. Patents and Trademarks are examples of
(a) intangible Fixed Assets.
(b) Tangible Fixed Assets.
(c) Intangible Assets under Development.
(d) Capital Work-in-Progress.

Question: A company prepares its Balance Sheet as per the format in
(a) Schedule VI of the Indian Companies Act, 2013
(b) Schedule II of the Indian Companies Act, 2013
(c) Schedule IV of the Indian Companies Act, 2013
(d) None of the options

Question: Which are the determinants of dividend policy
(a) All of the options
(b) Working Capital Requirement
(c) Liquidity Position
(d) Legal Requirement

Question. Name the item out of the following which is shown as Short-term Provision:
(a) Provision for Tax
(b) Interest Accrued but not Due
(c) Employees’ Provident Fund
(d) Interest Accrued and Due

Question: Provision for Provident Fund comes under
(a) Long-term Provision
(b) Trade Payable
(c) Other Current Liabilities
(d) None of the options

Question: Which are written off every year from the profits earned by the business.
(a) Preliminary Expenses and Liabilities
(b) Liabilities
(c) Preliminary Expenses
(d) None of the options

Question. Share Capital of a Company consists of 5,00,000 Shares of Rs.10 each, Rs.8 called up. All the shareholders have duly paid the called-up amount. Share capital will be shown as :
(a) Subscribed and Fully Paid
(b) Subscribed but not fully paid
(c) Any of the above
(d) None of the above

Question: Bills Payable shown under major heading Current Liability and Subheading
(a) Trade Payable
(b) Short-term Provision
(c) Other Current Liabilities
(d) None of the options

Question: Which statement shows the sources related to the inflow and Outflow of cash
(a) Cash Flow Statement
(b) Fund Flow Statement
(c) Ratio Analysis
(d) None of the options

Question: Gross profit is equal to
(a) Sale – cost of sale
(b) Sale – Expenses
(c) Sale – cost of sale and Sale – Expenses
(d) None of the options

Question: Financial Statement also called
(a) Final Accounts
(b) Profit & Loss A/c
(c) Trading A/c
(d) None of the options

Question. Provision for Tax appears in a Company’s Balance Sheet under the Sub-head …………….
(a) Short-term Provisions
(b) Reserves and Surplus
(c) Long-term Provisions
(d) Other Current Liabilities

Question: Tangible assets are assets which can be physically seen and touched, Like
(a) Furniture & Fixture
(b) Land & Building
(c) Plant and Equipment
(d) All of the options

Question: Persons who are willing to invest in any organization always wish to know about the profitability and solvency of the business concern
(a) Employees and Workers
(b) Investors and Potential Investors
(c) All of the options
(d) Owner

Question: The basic equation on which a profit & loss statement is based is
(a) Revenues – Expenses = Profit
(b) Revenues + Expenses = Profit
(c) Revenues – Expenses = Profit and Revenues + Expenses = Profit
(d) None of the options

Question: Balance Sheet of A Company is prepared according to the Revised Schedule III, Part-I of
(a) Section 213
(b) Section 211
(c) Section 217
(d) Section 209

Question: Bills receivable and debtors are
(a) Current assets
(b) Fixed assets
(c) Long term assets
(d) None of the options

Ques. While preparing the Balance Sheet of a company ‘Securities Premium’ is shown under :
(a) Current Liability
(b) Share Capital
(c) Long-term Borrowings
(d) None of the above

Question: Salaries outstanding Rs 50,000 will be record in the balance sheet under
(a) Other Current Liabilities
(b) Other Current Assets
(c) Non-current Liabilities
(d) All of the options

Question. In a company’s Balance Sheet Provision for Employees Benefits to be settled within 12 months is shown under
(a) Non-current Liabilities.
(b) Current Liabilities.
(c) Non-current Assets.
(d) Current Assets.

Question: Fixed Assets are
(a) All of the options
(b) Land and Building
(c) Plant and Machinery
(d) Motor Car

Question: Which items is not the example of operating expenses
(a) Loss on sale of fixed assets
(b) Cash discount allowed to customers
(c) Selling and Distribution expenses
(d) All of the options

Question. Interest accrued and due on debentures appear in a Company’s Balance Sheet under the Sub-head …………….
(a) Short-term Borrowings
(b) Trade Payables
(c) Other Current Liabilities
(d) Short-term Provisions

Question. ……………. appear in a Company’s Balance Sheet under the Sub-head Short-term Provision
(a) Interest Accrued but not due on Borrowings
(b) Provision for Tax
(c) Unpaid Dividend
(d) Calls in Advance

Question. Which of the following is not required to be prepared under the Companies Act:
(a) Statement of Profit & Loss
(b) Balance Sheet
(c) Anditor’s Report
(d) Fund Flow Statement

Question. Which one of the following items is shown under the heading ‘current liabilities’ in the Balance Sheet of a company?
(a) Investments
(b) Reserve Fund
(c) Unclaimed Dividend
(d) Livestock

Question. List any two items that are presented under the head ‘Other Current Liabilities’ and any two items that are presented under the head ‘Other Current Assets’ as per Schedule III of the Companies Act, 2013.
OR
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. 

Question. List any four items of ‘reserves’ that are shown under the heading ‘Reserves and Surplus’ in the Balance Sheet of a Company as per Schedule III of the Companies Act, 2013. 

Question. Anuj, the Accountant of Best Choice Furniture Ltd. has shown Building under ‘Inventories’ as the company has decided to sell one of its buildings next month. Is he correct in his approach ? 

Question. State under which major 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 :

Question. Hazel Ltd. has been established by the persons who were earlier working as partners. They decided to follow the same Balance Sheet format as they used in their partnership firm. Can they follow the same format of Balance Sheet ? 

Question. List any four items other than ‘stock-in-trade’ that are presented under the sub-head ‘Inventories’ as per Schedule III of the Companies Act, 2013.