We have given these Accountancy Class 12 Important Questions and Answers Chapter 8 Financial Statements of a Company to solve different types of questions in the exam. Go through these Class 12 Accountancy Chapter 8 Financial Statements of a Company Class 12 Important Questions and Answers Solutions & Previous Year Questions to score good marks in the board examination.
Financial Statements of a Company Important Questions Class 12 Accountancy Chapter 8
Question 1.
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. (All India 2016)
Answer;
The four items shown under the heading ‘reserves and surplus’ are
- Capital reserve
- Securities premium reserve
- Capital redemption reserve
- Debenture redemption reserve
Question 2.
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. (Delhi 2016)
Answer:
The two items shown under the head ‘other current liabilities’ are
- Unpaid dividends
- Income received in advance
The two items shown under the head ‘other current assets’ are
- Prepaid expenses
- Advance taxes
Question 3.
Identify the major heads under which the following items will be shown in the balance sheet of a company as per Schedule III of Companies Act, 2013. (All India 2016)
(i) Provision for tax
(ii) Loans payable on demand
(iii) Computer and related equipment
(iv) Goods acquired for trading
Answer:
| Items | Major Heads |
| (i) Provision for Tax | Current Liabilities |
| (ii) Loans Payable on Demand | Current Liabilities |
| (iii) Computer and Related Equipment | Non-current Assets |
| (iv) Goods Acquired for Trading | Current Assets |
Question 4.
Name the major heads under which the following items will be presented in the balance sheet of a company as per Schedule III of the Companies Act, 2013. (Delhi (C) 2016)
(i) Loose tools
(ii) Copyrights and Patents
(iii) Unpaid dividend
(iv) Land and Building
Answer:
| Items | Major Heads |
| (i) Loose tools | Current Assets |
| (ii) Copyrights and Patents | Non-current Assets |
| (iii) Unpaid dividend | Current Liabilities |
| (iv) Land and Building | Non-current Assets |
Question 5.
Under which sub-headings, the following items will be placed in the balance sheet of a company as per Schedule III, Part I of the Companies Act, 2013.
(i) Accrued incomes
(ii) Loose tools
(iii) Provision for employees benefits
(iv) Unpaid dividend
(v) Short-term loans
(vi) Long-term loans
(vii) Calls-in-advance (Compartment 2018: Delhi 2014 Modified)
Answer:
| Items | Major Heads |
| (i) Accrued incomes | Other Current Assets |
| (ii) Loose tools | Inventories |
| (iii) Provision for employees benefits | Short-term Provision |
| (iv) Unpaid dividend | Other Current Liabilities |
| (v) Short-term loans | Short-term Borrowings |
| (vi) Long-term loans | Long-term Borrowings |
| (vii) Calls-in-advance | Current Liabilities |
Question 6.
Under which sub-headings 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 reserves
(ii) Bonds
(iii) Loans repayable on demand
(iv) Vehicles
(v) Goodwill
(vi) Loose tools (All India 2014)
Answer:
| Items | Major Heads |
| (i) Capital reserves | Reserves and Surplus |
| (ii) Bonds | Long-term Borrowings |
| (iii) Loans repayable on demand | Short-term Borrowings |
| (iv) Vehicles | Fixed (Tangible) Assets |
| (v) Goodwill | Fixed (Intangible) Assets |
| (vi) Loose tools | Inventories |
Question 7.
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.
(i) Long-term borrowings
(ii) Trade payables
(iii) Provision for tax
(iv) Securities premium reserve
(v) Patents
(vi) Accrued incomes
(vii) Current investment (Delhi (C) 2014 Modified)
Answer:
| Items | Major Heads |
| (i) Long-term borrowings | Non-current Liabilities |
| (ii) Trade payables | Current Liabilities |
| (iii) Provision for tax | Current Liabilities |
| (iv) Securities premium reserve | Shareholders’ Funds |
| (v) Patents | Non-current Assets |
| (vi) Accrued incomes | Current Assets |
| (vii) Current investment | Current Assets |
Question 8.
Under what heads and sub-heads, will the following items appear in the balance sheet of a company as per Schedule III, Part I of the Companies Act, 2013.
(i) Stores and spares
(ii) Proposed dividend
(iii) Computer software (All India 2013)
Answer:
| Items | Major Headings | Sub-headings |
| (i) Stores and spares | Current Assets | Inventories |
| (ii) Proposed dividend | Current Liabilities | Short-term Provisions |
| (iii) Computer software | Non-current Assets | Fixed Assets (Intangible assets) |
Question 9.
Under what heads and sub-heads, will the following items appear in the balance sheet of a company as per Schedule III, Part I of the Companies Act, 2013.
(i) Debentures
(ii) Loose tools
(iii) Calls-in-advance (All India 2013)
Answer:
| Items | Major Headings | Sub-headings |
| (i) Debentures | Non-current Liabilities | Long-term Borrowings |
| (ii) Loose tools | Current Assets | Inventories |
| (iii) Calls-in-advance | Current Liabilities | Other Current Liabilities |
Question 10.
Under what heads and sub-heads, will the following items appear in the balance sheet of a company as per Schedule III, Part I of the Companies Act, 2013.
(i) Mining rights
(ii) Encashment of employees earned leave payable on retirement
(iii) Vehicles (Delhi 2013)
Answer:
| Items | Major Headings | Sub-headings |
| (i) Mining rights | Non-current Assets | Fixed Assets (Intangible assets) |
| (ii) Encashment of employees earned leave payable on retirement | Non-current Liabilities | Long-term Provisions |
| (iii) Vehicles | Non-current Assets | Fixed Assets (Tangible assets) |
Question 11.
Under what heads and sub-heads, the following items will appear in the balance sheet of a company as per Schedule III, Part I of the Companies Act, 2013.
(i) Tax reserve
(ii) Interest on calls-in-advance
(iii) Stores and spares (Delhi 2013)
Answer:
| Items | Major Headings | Sub-headings |
| (i) Tax reserve | Current Liabilities | Short-term Provisions |
| (ii) Interest on calls-in-advance | Current Liabilities | Other Current |
| (iii) Stores and spares | Current Assets | Liabilities Inventories |
Question 12.
Under what heads and sub-heads, the following items will appear in the balance sheet of a company as per Schedule III, Part I of the Companies Act, 2013.
(i) Premium on redemption of debentures
(ii) Loose tools
(iii) Balances with banks (Delhi 2013)
Answer:
| Items | Major Headings | Sub-headings |
| (i) Premium on redemption of debentures | Non-Current Liabilities | Other Long-term Liabilities |
| (ii) Loose tools | Current Assets | Inventories |
| (iii) Balances with banks | Current Assets | Cash and Cash Equivalents |
Question 13.
Under what heads and sub-heads, will the following items appear in the balance sheet of a company as per Schedule III, Part I of the Companies Act, 2013.
(i) Subsidy reserve
(ii) Mining rights
(iii) Provision for doubtful debts (All India 2013)
Answer:
| Items | Major Headings | Sub-headings |
| (i) Subsidy reserve | Shareholders Funds | Reserves and Surplus |
| (ii) Mining rights | Non-current Assets | Fixed Assets (Intangible assets) |
| (iii) Provision for doubtful debts | Current Liabilities | Short-term Provisions |
Question 14.
State the major headings under which the following items will be put as per Schedule III, Part I of the Companies Act, 2013.
(i) Long-term investments
(ii) Trade receivables
(iii) Motorcar
(iv) Discount on issue of shares
(v) Securities premium reserve
(vi) Unclaimed dividend (All India 2011)
Answer:
| Items | Major Heads |
| (i) Long-term investments | Non-current Assets |
| (ii) Trade receivables | Current Assets |
| (iii) Motorcar | Non-current Assets |
| (iv) Discount on issue of shares | Adjusted through Share Forfeiture A/c |
| (v) Securities premium reserve | Shareholders’ Funds |
| (vi) Unclaimed dividend | Current Liabilities |
NOTE: ‘Discount is allowed on reissue of forfeited shares only.
Question 15.
Give the major headings under which the following items will be shown in a company’s balance sheet as per Schedule III, Part I of the Companies Act, 2013.
(i) Trade payables (Sundry creditors)
(ii) Provision for tax
(iii) Preliminary expenses
(iv) Loose tools
(v) Interest accrued on investments
(vi) Goodwill (All India 2011)
Answer:
| Items | Major Heads |
| (i) Trade payables (Sundry creditors) | Current Liabilities |
| (ii) Provision for tax | Current Liabilities |
| (iii) Preliminary expenses | Deducted from securities premium reserve |
| (iv) Loose tools | Current Assets |
| (v) Interest accrued on investments | Current Assets |
| (vi) Goodwill | Non-current Assets |
Question 16.
How will you disclose the following items while preparing the balance sheet of a company, as per Schedule III of the Companies Act, 2013?
(i) Bank overdraft
(ii) Share issue expenses
(iii) Matured debentures
(iv) Building under construction. (Delhi 2011 Modified)
Answer:
| Items | Major Headings | Sub-headings |
| (i) Bank overdraft | Current Liabilities | Short-term Borrowings |
| (ii) Share issue expenses | Non-current Assets | Other Non-current Assets |
| (iii) Matured debentures | Current Liabilities | Other Current Liabilities |
| (iv) Building under construction. | Non-current Assets | Fixed Assets (Capital work-in-progress) |
Question 17.
List the items which are shown under the heading ‘current assets’ in the balance sheet of a company as per Schedule III, Part I of the Companies Act, 2013. (Delhi 2011; Modified)
Answer:
Current Assets
(i) Current investments
(ii) Inventories
(iii) Trade receivables
(iv) Cash and cash equivalents
(v) Short-term loans and advances
(vi) Other current assets
Question 18.
List the items which are shown under the heading ‘current liabilities’ as per Schedule III, Part I of the Companies Act, 2013. (Delhi 2011)
Answer:
Current Liabilities
(i) Short-term borrowings
(ii) Trade payables
(iii) Other current liabilities
(iv) Short-term provisions
Question 19.
State under which major headings and sub-headings will the following items be presented in the Balance Sheet of a company as per Schedule-Ill, Part-I of the Companies Act, 2013.
(i) Prepaid .Insurance
(ii) Investment in Debentures
(iii) Calls-in-arrears
(iv) Unpaid Dividend
(v) Capital Reserve
(vi) Loose Tools
(vii) Capital Work-in-progress
(viii) Patents being developed by the company. (Delhi 2019)
Answer:
| Items | Major Heads |
| (i) Prepaid .Insurance | Other Current Assets |
| (ii) Investment in Debentures | Non-current Investments |
| (iii) Calls-in-arrears | Share Capital (Notes to accounts) |
| (iv) Unpaid Dividend | Other Current Liabilities |
| (v) Capital Reserve | Reserves and Surplus |
| (vi) Loose Tools | Inventories |
| (vii) Capital Work-in-progress | Fixed Assets |
| (viii) Patents being developed by the company. | Intangible Assets under Development |
Question 20.
Under which major heads and sub-heads will the following items be placed in the Balance Sheet of the company as per Schedule III, Part I of the Companies Act, 2013?
(i) Cheques and bank drafts in hand
(ii) Loose tools
(iii) Securities premium reserve
(iv) Long-term investments with maturity period less than six months
(v) Work-in-progress
(vi) Mining rights
(vii) Publishing titles
(viii) Debtors (All India 2019)
Answer:
| Items | Major Heads |
| (i) Cheques and bank drafts in hand | Cash & Cash Equivalents |
| (ii) Loose tools | Inventories |
| (iii) Securities premium reserve | Reserves and Surplus |
| (iv) Long-term investments with maturity period less than six months | Current Investments |
| (v) Work-in-progress | Inventories |
| (vi) Mining rights | Intangible Assets |
| (vii) Publishing titles | Intangible Assets |
| (viii) Debtors | Trade Receivables |
Question 21.
Under which major headings and sub-headings will the following items be presented in theBalance Sheet of a company as per Schedule III, Part I of the Companies Act, 2013?
(i) Interest accrued and due on debentures
(ii) Loose tools
(iii) Accrued interest on calls-in-advance
(iv) Interest due on calls-in-arrears
(v) Trademarks
(vi) Premium on redemption of debentures
(vii) Plant and Machinery
(viii) Patents (All India 2019)
Answer:
| Items | Major Heads |
| (i) Interest accrued and due on debentures | Other Current Liabilities |
| (ii) Loose tools | Inventories |
| (iii) Accrued interest on calls-in-advance | Other Current Liabilities |
| (iv) Interest due on calls-in-arrears | Other Current Assets |
| (v) Trademarks | Fixed Assets-Intangible Assets |
| (vi) Premium on redemption of debentures | Other Non-current Liabilities |
| (vii) Plant and Machinery | Fixed Assets-Tangible Assets |
| (viii) Patents | Fixed Assets-Intangible Assets |
Question 22.
JW Ltd was a company manufacturing geysers. As a part of its long-term goal for expansion, the company decided to identify the opportunity in rural areas. Initial plan was rolled out for Bhiwani village in Haryana. Since the village did not have regular supply of electricity, the company decided to manufacture solar geysers. The core team consisting of the Regional Manager, Accountant and the Marketing Manager was taken from the Head Office and the remaining employees were selected from the village and neighbourhood areas.
At the time of preparation of financial statements, the accountant of the company fell sick and the company deputed a junior accountant temporarily from the village for two months.
The balance sheet prepared by the junior accountant showed the following items against the major heads and sub-heads mentioned which were not as per Schedule HI of the Companies Act, 2013.
| Items | Major Heads/ Sub-headings |
| Loose Tools | Trade Receivables |
| Cheques in Hand | Current Investments |
| Term Loan from Bank | Other Long-term Liabilities |
| Computer Software | Tangible Fixed Assets |
Present the above items under the correct major heads and sub-heads as per Schedule III of the Companies Act, 2013. CBSE 2018 Modified
Answer:
| Items | Major Headings | Sub-headings |
| Loose Tools | Current Assets | Inventories |
| Cheques in Hand | Current Assets | Cash and Cash Equivalents |
| Term Loan from Bank | Non-current Liabilities | Long-term Borrowings |
| Computer Software | Non-current Assets | Fixed Assets (Intangible) |
Question 23.
(i) Give the meaning of ‘long-term provisions’.
(ii) 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. (All India 2016)
Answer:
(i) Long-term provisions are the provisions against which liability will arise after 12 months of the date of balance sheet or after the period of operating cyde. e.g. Provision made for retirement benefits payable to employees who will retire after 12 months from the date of balance sheet, provision for warranty claims that relates to the period after 12 months of the date of balance sheet.
(ii) The items other than ‘stock-in-trade’ that are presented under the sub-head inventories are
- Raw material
- Work-in-progress
- Finished goods
- Stores and spares
Question 24.
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) Net loss as shown by statement of profit and loss
(ii) Capital redemption reserve
(iii) Bonds
(iv) Loans repayable on demand
(v) Unpaid dividend
(vi) Buildings
(vii) Trademarks
(viii) Raw materials (All India 2015)
Answer:
| Items | Major Heads | Sub-headings |
| (i) Net loss as shown by statement of profit and loss | Shareholders Funds | Shown by way of deduction under Reserves and Surplus |
| (ii) Capital redemption reserve | Shareholders Funds | Reserves and Surplus |
| (iii) Bonds | Non-current Liabilities | Long-term Borrowings |
| (iv) Loans repayable on demand | Current Liabilities | Short-term Borrowings |
| (v) Unpaid dividend | Current Liabilities | Other Current Liabilities |
| (vi) Buildings | Non-current Assets | Tangible Fixed Assets |
| (vii) Trademarks | Non-current Assets | Intangible Fixed Assets |
| (viii) Raw materials | Current Assets | Inventories |
Question 25.
Under which heads and sub-heads the following items will be placed in the balance sheet of a company as per Schedule III, Part I of the Companies Act, 2013?
(i) Cash in Hand
(ii) Mining Rights
(iii) Short-term Deposits
(iv) Debenture Redemption Reserve
(v) Income Received in Advance
(vi) Balance of the Statement of Profit and Loss
(vii) Office Equipments
(viii) Work-in-progress (Delhi 2016)
Answer:
| Items | Major Heads | Sub-headings |
| (i) Cash in Hand | Current Assets | Cash and Cash Equivalents |
| (ii) Mining Rights | Non-current Assets | Intangible Fixed Assets |
| (iii) Short-term Deposits | Current Assets | Cash and Cash Equivalents |
| (iv) Debenture Redemption Reserve | Shareholders Funds | Reserves and Surplus |
| (v) Income Received in Advance | Current Liabilities | Other Current Liabilities |
| (vi) Balance of the Statement of Profit and Loss | Shareholders Funds | Reserves and Surplus |
| (vii) Office Equipments | Non-current Assets | Tangible Fixed Assets |
| (viii) Work-in-progress | Current Assets | Inventories |
Question 26.
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 ₹ 1,00,000 payable after three years
(iii) Short-term deposits payable on demand
(iv) Loose tools
(v) Trademark
(vi) Land
(vii) Cash at bank
(viii) Trade payables (All India 2015)
Answer:
| Items | Major Heads | Sub-headings |
| (i) Balance of the statement of profit and loss | Shareholders’ Funds | Reserves and Surplus |
| (ii) Loan of ₹ 1,00,000 payable after three years | Non-current Liabilities | Long-term Borrowings |
| (iii) Short-term deposits payable on demand | Current Assets | Short-term Loans and Advances |
| (iv) Loose tools | Current Assets | Inventories |
| (v) Trademark | Non-current Assets | Intangible Fixed Assets |
| (vi) Land | Non-current Assets | Tangible Fixed Assets |
| (vii) Cash at bank | Current Assets | Cash and Cash Equivalents |
| (viii) Trade payables | Current Liabilities | Trade Payables |
Question 27.
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?
(i) Loans provided repayable on demand
(ii) Goodwill
(iii) Copyrights
(iv) Loose tools
(v) Cheques
(vi) General reserve
(vii) Stock of finished goods
(viii) 9% debentures repayable after three years (Delhi 2015)
Answer:
| Items | Major Heads |
| (i) Loans provided repayable on demand | Current Assets |
| (ii) Goodwill | Non-current Assets |
| (iii) Copyrights | Non-current Assets |
| (iv) Loose tools | Current Assets |
| (v) Cheques | Current Assets |
| (vi) General reserve | Shareholders’ Funds |
| (vii) Stock of finished goods | Current Assets |
| (viii) 9% debentures repayable after three years | Non-current Liabilities |
Question 28.
Under which major heads and sub-heads 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) Bank overdraft
(ii) Cash and cash equivalents
(iii) Securities premium reserve
(iv) Negative balance of the statement of profit and loss
(v) Goodwill
(vi) Trademark
(vii) 5 years loan obtained from SBI
(viii) Investments (Foreign 2018)
Answer:
| Items | Major Heads | Sub-headings |
| (i) Bank overdraft | Current Liabilities | Short-term Borrowings |
| (ii) Cash and cash equivalents | Current Assets | Cash and Cash Equivalents |
| (iii) Securities premium reserve | Shareholders Funds | Reserves and Surplus |
| (iv) Negative balance of the statement of profit and loss | Shareholders Funds | Shown by Way of Deduction from Reserves and Surplus |
| (v) Goodwill | Non-current Assets | Intangible Fixed Assets |
| (vi) Trademark | Non-current Assets | Intangible Fixed Assets |
| (vii) 5 years loan obtained from SBI | Non-current Liabilities | Long-term Borrowings |
| (viii) Investments | Non-current Assets | Non-current Investments |
Question 29.
Financial statements are presented by directors to shareholders at every
(a) board meeting
(b) special (extraordinary) general meeting
(c) annual general meeting
(d) None of the above
Answer:
(c) annual general meeting
Question 30.
A company should disclose all the information in
(a) statement
(b) annual report
(c) accounts book
(d) None of these
Answer:
(b) annual report
Question 31.
Financial statements include balance sheet, statement of profit and loss, cash flow statement etc. Besides these statements, a special statement is also included in financial statements if applicable on company. You are required to find that statement.
(a) Statement of cash inflow and outflow
(b) Statement of changes in equity
(c) Statement of incomes and expenses
(d) Statement of assets and liabilities
Answer:
(b) Statement of changes in equity
Question 32.
Statement of profit and loss shows
(a) financial position
(b) financial performance
(c) assets and liabilities
(d) None of the above
Answer:
(b) financial performance
Question 33.
Format of profit and loss is prepared as specified in
(a) Part II, Schedule III
(b) Income Tax Act
(c) SEBI Act
(d) None of these
Answer:
(a) Part II, Schedule III
Question 34.
Which of the following is included under ‘other income’ head?
(a) Purchase of stock
(b) Sales of stock
(c) Interest received
(d) None of these
Answer:
(c) Interest received
Question 35.
A company took a loan of ₹ 1,00,000 and paid interest of ₹ 10,000 for this year @ 10% on loan amount. This interest will be shown under …………. head.
(a) finance cost
(b) employee benefit expense
(c) revenue from operation
(d) None of the above
Answer:
(a) finance cost
Question 36.
Calculate revenue from operation from following.
Sales = ₹ 1,04,00,000
Sales return = ₹ 4,00,000
Sales of scrap = ₹ 50,000
Dividend received = ₹ 20,000
Interest on fixed deposit = ₹ 60,000
(a) ₹ 1,00,00,000
(b) ₹ 1,01,30,000
(c) ₹ 1,00,80,000
(d) ₹ 1,00,50,000
Answer:
(d) ₹ 1,00,50,000
Question 37.
Compute cost of material consumed from following.
Opening inventory = ₹ 5,00,000
Materials purchased = ₹ 40,00,000
Closing inventory = ₹ 6,00,000
(a) ₹ 40,00,000
(b) ₹ 39,00,000
(c) ₹ 38,00,000
(d) ₹ 41,00,000
Answer:
(b) ₹ 39,00,000
Question 38.
Which of the following is included on assets side?
(a) Share capital
(b) Inventories
(c) Bills payable
(d) None of the above
Answer:
(b) Inventories
Question 39.
Find out which of the following is a reserve for distributing dividend?
(a) General reserve
(b) Capital reserve
(c) Revaluation reserve
(d) None of the above
Answer:
(a) General reserve
Question 40.
Find which of the following is shown in notes to accounts only.
(a) Inventories
(b) Current investments
(c) Contingent liability
(d) Building
Answer:
(c) Contingent liability