CBSE Class 12 Accountancy Financial Statement Of Companies MCQs Set 05

Answer: (a) III, Part I

Explanation:
1. Part I of Schedule III of the Companies Act, 2013 prescribes the form of the Balance Sheet; Part II prescribes the Statement of Profit and Loss.

Teacher's Note:
1. Remember: Schedule III, Part I = Balance Sheet; Schedule III, Part II = Statement of Profit and Loss.

Answer: (b) Authorised Capital

Explanation:
1. Authorised (registered or nominal) capital is the maximum capital a company can raise, as stated in its Memorandum of Association.

Teacher's Note:
1. Order of size: Authorised ≥ Issued ≥ Subscribed ≥ Called-up ≥ Paid-up.

Answer: (b) Subscribed but not fully paid

Explanation:
1. When the final call has been made but some of it is unpaid (calls-in-arrears), the shares are shown as “Subscribed but not fully paid”, with calls-in-arrears deducted.

Teacher's Note:
1. Shares are “subscribed and fully paid” only when the full nominal value has been called AND received.

Answer: (a) Long-term Borrowings

Explanation:
1. The debentures are repayable after more than 12 months from the Balance Sheet date, so they are Long-term Borrowings under Non-current Liabilities.

Teacher's Note:
1. Debentures due for redemption within 12 months of the Balance Sheet date move to Other Current Liabilities (current maturities of long-term debt).

Answer: (b) Reserves and Surplus

Explanation:
1. Profit for the year is added to Surplus, i.e., Balance in Statement of Profit and Loss, which is part of Reserves and Surplus.

Teacher's Note:
1. A debit (loss) balance of Statement of Profit and Loss is also shown under Reserves and Surplus, as a negative figure.

Answer: (c) Both of the above

Explanation:
1. Trade Payables are amounts owed for goods bought or services received in the normal course of business: Sundry Creditors and Bills Payable.

Teacher's Note:
1. Trade Receivables (Debtors + B/R) and Trade Payables (Creditors + B/P) mirror each other.

Answer: (c) Retirement benefits to employees

Explanation:
1. Retirement benefits to employees are a provision (long-term or short-term provision), not a borrowing.

Teacher's Note:
1. Provisions for employee benefits are shown under Provisions, never under Borrowings.

Answer: (c) Forfeited Share Account

Explanation:
1. Amount in Forfeited Shares Account is added to subscribed capital in the Notes; calls-in-arrears are deducted and calls-in-advance are shown as Other Current Liabilities.

Teacher's Note:
1. Calls-in-advance is never part of share capital; it is a liability until the call is made.

Answer: (b) Other Current Liability

Explanation:
1. Unclaimed dividend is dividend declared but not yet claimed by shareholders; it is shown under Other Current Liabilities.

Teacher's Note:
1. Unclaimed dividend is a definite amount owed, so it is a liability, not a provision.

Answer: (b) Trade Receivables

Explanation:
1. Trade Receivables are realised within the operating cycle, so they are Current Assets.

Teacher's Note:
1. Vehicles and patents are fixed assets and investment in property is a non-current investment.

Answer: (b) Non-current Liabilities

Explanation:
1. Provision for Provident Fund is an employee-benefit provision settled after more than 12 months, so it is a Long-term Provision under Non-current Liabilities.

Teacher's Note:
1. Employee-benefit provisions are split: the part due within 12 months is a short-term provision.

Answer: (a) Contingent Liability

Explanation:
1. Under AS 4 (Revised), proposed dividend for the current year is not provided for; it is disclosed as a contingent liability in the Notes to Accounts.

Teacher's Note:
1. Do not show the current year’s proposed dividend as a short-term provision.

Answer: (a) Fixed Assets

Explanation:
1. Goodwill is an intangible asset, shown under Fixed Assets (Intangible Assets) in Non-current Assets.

Teacher's Note:
1. Goodwill, patents, trademarks and computer software are all Intangible Assets.

Answer: (c) Subscribed capital

Explanation:
1. Calls-in-arrears are deducted from called-up capital under “Subscribed but not fully paid” in the Notes on Share Capital.

Teacher's Note:
1. Authorised and issued capital are never reduced by calls-in-arrears.

Answer: (c) Inventories

Explanation:
1. Stores and spares (and loose tools) are shown under Inventories in Current Assets.

Teacher's Note:
1. Inventories include raw materials, work-in-progress, finished goods, stock-in-trade, stores and spares and loose tools.

Answer: (c) Bank Overdraft

Explanation:
1. Bank overdraft is a short-term borrowing (current liability), not a cash equivalent.

Teacher's Note:
1. Bank overdraft is shown under Short-term Borrowings, never netted off from cash.

Answer: (a) Revenue from Operations

Explanation:
1. Sale of stock-in-trade (goods bought for resale) is the main business activity, so it is Revenue from Operations.

Teacher's Note:
1. Income from the main activity is Revenue from Operations; incidental income is Other Income.

Answer: (b) Other Incomes

Explanation:
1. Interest is not from the main business of a manufacturing company, so it is Other Income.

Teacher's Note:
1. The same interest would be Revenue from Operations for a finance company.

Answer: (a) Revenue from operations

Explanation:
1. Earning interest is the main business of a financing company, so it is Revenue from Operations.

Teacher's Note:
1. Always check the nature of the company before classifying interest or dividend income.

Answer: (c) Other Expenses

Explanation:
1. Electricity and telephone expenses do not fit any specific head, so they are shown under Other Expenses.

Teacher's Note:
1. Finance Cost is only for interest and other borrowing costs.