Chapter 8: Financial Statements of a Company

Important Questions

1. Write the characteristics and nature of financial statements?

2. Define the following:-

1. Capital reserve
2. Capital Redemption Reserve
3. Debenture redemption reserve
4. Share capital paid up

3. Name the sub-heads under the head ‘Non-current liabilities’ in the equity and liabilities part of the balance sheet as per schedule III of the companies’ act 2013.

4. Name any four items under the heading other current liabilities?

5. Under which main heads and sub-heads of Equity and Liabilities part of the balance sheet as per schedule III are the following items shown?

1. Interest Accrued and due on secured loans
2. Debenture redemption reserve
3. Capital redemption reserve
4. Advances from customers (long term)
5. Interest accrued but not due on unsecured loans

Sample Questions

1. List some non-current assets and current assets.

2. List five items which are included under the head ‘Non-current Investments’.)

3. Under what main heads and sub-heads of assets part are the following items classified in the balance sheet:

1. Bills receivables
2. Sundry debtors
3. Long term investments
4. Shares in listed companies
5. Prepaid insurance
6. Deposits with customer authorities
7. Building

4. Explain how financial statements are useful to the various parties who are interested in the affairs of an undertaking?

5. On April 1 , 2017, Jumbo Ltd., issued 10,000; 12% debentures of Rs. 100 each a discount of 20%, redeemable after 5 years. The company decided to write-off discount on issue of such debentures on March 31, 2018. Show the items in the balance sheet of the company immediately after the issue of these debenture

MCQ

1. The format of financial statement of a company is prescribed in -

(a) Section 129, Schedule III
(b) Section 121, Schedule III
(c) Section 130, Schedule III
(d) Section 129, Schedule I

2. Financial statements disclose -

(a) Monetary information

(b) Qualitative information

(c) Non-Monetary information

(d) All of the above

3. The assets of a business can be classified as -

(a) Fixed and non fixed assets

(b) Tangible and intangible assets

(c) Non-Current and current assets

(d) None of these

4. Which of the following is not shown as a non current liabilities?

(a) Trade Payables

(b) Long term borrowings

(c) Deferred tax liabilities

(d) Long Term provisions

5. The profit and loss statement is also known as?

(a) Income statement

(b) Statement of earning

(c) Statement of operation

(d) All of these