GSEB Class 12 Accounts Solutions Chapter 3 Company Final Accounts

1. Select the correct option for each question :

 

Question 1.Financial statements of a company includes ........................
(A) statement of profit and loss and balance sheet
(B) cash flow statement and statement showing changes in equity
(C) notes to the accounts
(D) all of above
Answer: (D) all of above
In simple words: Company financial statements typically encompass all listed components: the profit and loss statement, balance sheet, cash flow statement, statement of changes in equity, and supporting notes to provide a comprehensive view of financial health.

🎯 Exam Tip: Understanding the complete composition of financial statements is crucial for a holistic analysis of a company's performance and position, often tested in comprehensive questions.

 

Question 2.It is compulsory to prepare statement of profit and loss and balance sheet in ........................ form as per schedule III of Companies Act, 2013.
(A) horizontal or T,
(B) vertical
(C) statement of profit and loss is horizontal and balance sheet vertical
(D) statement of profit and loss is vertical and balance sheet horizontal
Answer: (B) vertical
In simple words: According to Schedule III of the Companies Act, 2013, both the statement of profit and loss and the balance sheet must be prepared in a vertical format, rather than a horizontal or T-account style.

🎯 Exam Tip: Remember that the vertical format mandated by Schedule III of the Companies Act, 2013, applies to both the Profit & Loss Statement and the Balance Sheet for corporate reporting.

 

Question 3......................... is/are compulsory to prepare in specified form as per schedule III of Companies Act, 2013.
(A) Balance sheet
(B) Statement of profit and loss
(C) Balance sheet and statement of profit and loss both
(D) Neither balance sheet nor statement of profit and loss
Answer: (C) Balance sheet and statement of profit and loss both
In simple words: Under Schedule III of the Companies Act, 2013, companies are required to prepare both the balance sheet and the statement of profit and loss in a specific, prescribed format.

🎯 Exam Tip: Knowing that both the Balance Sheet and the Statement of Profit and Loss are mandatory under Schedule III is fundamental for company accounting compliance.

 

Question 4.For ........................, it is compulsory to prepare statement of profit and loss and balance sheet in specified vertical form.
(A) sole proprietorship
(B) partnership
(C) all companies
(D) companies except insurance company, electricity company and banking company
Answer: (D) companies except insurance company, electricity company and banking company
In simple words: The requirement to prepare financial statements in the specified vertical format applies to most companies, but certain types like insurance, electricity, and banking companies follow their own specific regulatory formats.

🎯 Exam Tip: While most companies follow Schedule III, be aware of specific industry exceptions like insurance, banking, and electricity companies, which have their own reporting standards.

 

Question 5.Balance sheet is prepared ........................ while statement of profit and loss is prepared ........................
(A) for a particular accounting period, as at particular date
(B) as at particular date, for a particular accounting period
(C) as at particular date, as at particular date
(D) for a particular accounting period, for a particular accounting period
Answer: (B) as at particular date, for a particular accounting period
In simple words: A balance sheet reflects a company's financial position at a specific moment in time (a "snapshot"), whereas a statement of profit and loss reports performance over an entire accounting period.

🎯 Exam Tip: Distinguishing between the "as at a date" nature of a balance sheet and the "for a period" nature of a profit and loss statement is a core concept in financial accounting.

 

Question 6......................... shows financial position of a company while ........................ shows financial performance of a company.
(A) Statement of profit and loss, cash flow statement
(B) Balance sheet, cash flow statement
(C) Statement of profit and loss, balance sheet
(D) Balance sheet, statement of profit and loss
Answer: (D) Balance sheet, statement of profit and loss
In simple words: The balance sheet provides an overview of a company's assets, liabilities, and equity at a specific point, indicating its financial position, while the statement of profit and loss summarizes revenues and expenses over a period, showcasing financial performance.

🎯 Exam Tip: Accurately identifying which financial statement reflects position (Balance Sheet) and which shows performance (Profit and Loss) is fundamental to interpreting financial health.

 

Question 7.Assets and liabilities of a company are classified into ........................ and ........................ as per Companies Act, 2013.
(A) current, fixed
(B) fixed, fixed
(C) for short-term, for long-term
(D) current, non-current
Answer: (D) current, non-current
In simple words: The Companies Act, 2013 mandates that a company's assets and liabilities be categorized into current and non-current groupings, reflecting their short-term or long-term nature.

🎯 Exam Tip: The current/non-current classification is essential for analyzing a company's liquidity and solvency, directly reflecting statutory requirements under the Companies Act.

 

Question 8......................... assets considered as current asset.
(A) Convertible into cash during 12 months after the date of balance sheet
(B) Realisable during 12 months after the date of balance sheet
(C) Consumable within 12 months after the date of balance sheet
(D) All of above.
Answer: (D) All of above.
In simple words: An asset is considered current if it can be converted to cash, realized, or consumed within 12 months from the balance sheet date, encompassing various short-term liquid items.

🎯 Exam Tip: Remember the "12-month rule" or the normal operating cycle as the key determinant for classifying an asset as current, encompassing convertibility, realizability, and consumption.

 

Question 9.A machine to be sold during 12 months after the date of balance sheet is considered as ........................ as per Companies Act, 2013.
(A) fixed asset
(B) non-current asset
(C) current asset
(D) expense
Answer: (C) current asset
In simple words: Even though a machine is typically a fixed asset, if there's a clear intent to sell it within 12 months of the balance sheet date, it is reclassified as a current asset due to its short-term realizability.

🎯 Exam Tip: The intention to sell an asset within the next 12 months overrides its usual classification, making it a current asset, which is a common nuance tested in asset classification questions.

 

2. Answer in Two or Three Sentences:

 

Question 1.What is financial statements?
Answer: Financial statements are formal reports that provide a structured summary of an entity's financial activities and position at the end of an accounting period. These statements condense vast amounts of accounting data into an understandable format.
In simple words: Financial statements are key reports like the balance sheet and profit and loss account that summarize a company's financial information at a specific point or over a period.

🎯 Exam Tip: Define financial statements clearly, emphasizing their role in presenting summarized accounting information at the end of a period for various stakeholders.

 

Question 2.What is included in the financial statements?
Answer: As per section-2(40) of the Companies Act, 2013, financial statements for a company generally include:
• A balance sheet representing the financial position at the end of the fiscal year.
• A profit and loss account, or for non-profit entities, an income and expenditure account for the fiscal year.
• A cash flow statement for the fiscal year.
• A statement detailing changes in equity, if applicable.
• Comprehensive notes accompanying the accounts, providing additional details and disclosures.
In simple words: Financial statements include the balance sheet, profit and loss account, cash flow statement, statement of changes in equity (if applicable), and detailed notes, as defined by the Companies Act, 2013.

🎯 Exam Tip: Listing all components as per Section 2(40) of the Companies Act, 2013, demonstrates comprehensive knowledge of statutory reporting requirements.

 

Question 3.State characteristics of financial statements.
Answer: Financial statements possess several key characteristics:
• They are historical documents, reflecting past financial activities and periods.
• All figures presented within them are expressed in monetary terms.
• Their content is based on factual, recorded transactions.
• The profit and loss account specifically illustrates the profit or loss generated over a given period.
• The balance sheet offers insights into the company's financial standing at a specific date.
• Their preparation adheres to generally accepted accounting principles (GAAP).
In simple words: Financial statements are historical, monetary, fact-based reports showing a company's profit/loss, financial position, and are prepared using GAAP.

🎯 Exam Tip: Focus on core characteristics like historical nature, monetary expression, factual basis, and adherence to GAAP, as these define the reliability and scope of financial statements.

 

Question 4.State objectives of preparing financial statements.
Answer: The primary objectives behind preparing financial statements are:
• To present a true and fair view of a company's financial performance.
• To provide a true and fair view of a company's financial position.
• To ensure compliance with all relevant legal requirements.
• To effectively communicate the financial information of the company to various stakeholders and interested parties.
In simple words: Financial statements aim to show true financial performance and position, meet legal obligations, and inform stakeholders.

🎯 Exam Tip: Highlighting "true and fair view" for both financial performance and position, alongside legal compliance and stakeholder communication, covers the main objectives effectively.

 

Question 5.State main headings of equity and liabilities side of balance sheet as per schedule-III of Companies Act, 2013.
Answer: As per Schedule-III of the Companies Act, 2013, the main headings on the equity and liabilities side of the balance sheet are:
• Shareholder's funds
• Non-current liabilities
• Current liabilities
In simple words: The main headings on the equity and liabilities side of a balance sheet, as per the Companies Act, 2013, are Shareholder's Funds, Non-current Liabilities, and Current Liabilities.

🎯 Exam Tip: Listing these three main headings (Shareholder's Funds, Non-current Liabilities, Current Liabilities) demonstrates knowledge of the statutory balance sheet structure.

 

Question 6.Show the classification of non-current liabilities.
Answer: Non-current liabilities are typically classified as follows:
• Long-term borrowings
• Other long-term liabilities
• Long-term provisions
In simple words: Non-current liabilities include long-term borrowings, other long-term financial obligations, and long-term provisions.

🎯 Exam Tip: Remember these three sub-headings for non-current liabilities; they are a direct requirement for reporting as per Schedule III.

 

Question 7.Show the classification of current liabilities as per schedule III of Companies Act, 2013.
Answer: The classification of current liabilities as per Schedule III of the Companies Act, 2013, includes:
• Short-term borrowings
• Trade payables
• Other current liabilities
• Short-term provisions
In simple words: Current liabilities include short-term borrowings, amounts owed to suppliers (trade payables), other short-term obligations, and short-term provisions.

🎯 Exam Tip: Be precise in differentiating short-term liabilities (borrowings, trade payables, other liabilities, and provisions) from their long-term counterparts for accurate classification.

 

Question 8.What is current assets and non-current assets?
Answer:1. Current Assets: An asset is categorized as current if it meets any of these criteria:
• It is expected to be realized or intended for sale or consumption within the company's normal operating cycle.
• It is held primarily for the purpose of being traded.
• It is expected to be realized within 12 months after the reporting date.
2. Non-current Assets: Assets that do not fulfill the criteria for current assets are classified as non-current assets. These are typically held for long-term use and not intended for immediate sale or consumption.
In simple words: Current assets are those expected to be converted to cash, sold, or consumed within one year or the operating cycle, while non-current assets are held for longer periods for operational use.

🎯 Exam Tip: Clearly define current assets using the "expected to be realized/consumed within 12 months or operating cycle" rule, and then define non-current assets as everything else, for clarity.

 

Question 9.What is current liability and non-current liability?
Answer:1. Current Liability: A liability is classified as current if it fulfills any of the following conditions:
• It is expected to be settled within the company's normal operating cycle.
• It is held primarily for the purpose of being traded.
• It is due to be settled within twelve months after the reporting date.
2. Non-current Liability: All other liabilities that do not fit the criteria for current liabilities are categorized as non-current liabilities. These are obligations due for settlement beyond 12 months from the reporting date or outside the normal operating cycle.
In simple words: Current liabilities are obligations due within one year or the operating cycle, while non-current liabilities are those payable beyond that short-term period.

🎯 Exam Tip: Similar to assets, apply the "12-month rule" or "normal operating cycle" to liabilities for their classification as current or non-current, which is critical for liquidity assessment.

 

Question 10.Show the classification of current assets as per schedule-III of Companies Act 2013.
Answer: The classification of current assets as per Schedule-III of the Companies Act, 2013, includes:
• Current investments
• Inventories
• Trade receivables
• Cash and cash equivalents
• Short term loans and advances.
In simple words: Current assets include current investments, inventories, amounts owed by customers (trade receivables), cash, cash equivalents, and short-term loans and advances.

🎯 Exam Tip: Memorize the specific categories for current assets (investments, inventories, receivables, cash, short-term loans) as mandated by Schedule III for accurate financial reporting.

 

Question 3.How will you show following balances in the balance sheet of a company as per schedule-III of Companies Act, 2013?
(1) Creditors
(2) Security premium
(3) Bond
(4) Goodwill
(5) Bank overdraft
(6) Bills receivables
(7) Equity share capital
(8) Copyrights
(9) Debenture discount (To be written off during next year)
(10) Calls in advance
(11) Cash
(12) Provident fund
(13) Debentures
(14) Trademark
(15) Loose Tools
(16) Loan (Payable during next year)
(17) Bills payable
(18) General reserve
(19) Public deposit
(20) Debtors
(21) Patents
(22) Calls in arrears
(23) Debenture redemption fund
(24) Stores and loose Tools
(25) Licences
(26) Closing stock
(27) Bank balance
(28) Surplus as per statement of profit and loss
(29) Deposit in electricity company
(30) Premium on redemption of preference share
Answer:
The following balances will be presented in the balance sheet as per Schedule-III of the Companies Act, 2013:

No.	Particulars	Balance Sheet Head	Main Head	Sub Head
1.	Creditors	Equity-liabilities	Current liabilities	Trade payables
2.	Security premium	Equity-liabilities	Shareholder's funds	Reserve and surplus
3.	Bond	Equity-liabilities	Non-current liabilities	Long-term borrowings
4.	Goodwill	Assets	Non-current liabilities	Fixed assets - intangible
5.	Bank overdraft	Equity-liabilities	Current liabilities	Short-term borrowings
6.	Bills receivables	Assets	Current assets	Trade receivables
7.	Equity share capital	Equity-liabilities	Shareholder's funds	Share capital
8.	Copyrights	Assets	Non-current assets	Fixed assets - intangible
9.	Debenture discount (To be written off during next year)	Assets	Current assets	Other current assets
10.	Calls in advance	Equity-liabilities	Current liabilities	Other current liabilities
11.	Cash	Assets	Current assets	Cash - cash equivalent
12.	Provident fund	Equity-liabilities	Non-current liabilities	Long-term provisions
13.	Debentures	Equity-liabilities	Non-current liabilities	Long-term borrowings
14.	Trademark	Assets	Non-current assets	Fixed assets - intangible
15.	Loose Tools	Assets	Current assets	Inventory
16.	Loan (Payable during next year)	Equity-liabilities	Current liabilities	Other current liabilities
17.	Bills payable	Equity-liabilities	Current liabilities	Trade payables
18.	General reserve	Equity-liabilities	Shareholder's funds	Reserve and surplus
19.	Public deposit	Equity-liabilities	Non-current liabilities	Long-term borrowings
20.	Debtors	Assets	Current assets	Trade receivables
21.	Patents	Assets	Non-current assets	Fixed asset - tangible
22.	Calls in arrears	Equity-liabilities	Shareholder's funds	Deducted from share capital
23.	Debenture redemption fund	Assets	Non-current assets	Non-current investments
24.	Stores and loose Tools	Assets	Current assets	Inventory
25.	Licences	Assets	Non-current assets	Fixed assets - intangible
26.	Closing stock	Assets	Current assets	Inventory
27.	Bank balance	Assets	Current assets	Cash - Cash equivalent
28.	Surplus as per statement of profit and loss	Equity-liabilities	Shareholder's funds	Reserve and surplus
29.	Deposit in electricity company	Assets	Non-current assets	Long-term loans and advances
30.	Premium on redemption of preference share	Equity-liabilities	Non-current liabilities	Other long-term liabilities

In simple words: This classification categorizes each item into its appropriate balance sheet section, distinguishing between shareholder's funds, liabilities (current and non-current), and assets (current and non-current), with relevant sub-headings.

🎯 Exam Tip: A thorough understanding of Schedule III's hierarchical structure (Balance Sheet Head, Main Head, Sub Head) is critical for correctly classifying and presenting each item.

 

Question 4.Following balances are taken from the books of Seema Ltd. on 31-3-2017. Prepare statement indicating assets of balance sheet as at 31-3-2017 as per schedule-III of Companies Act, 2013.

Balance	(Rs.)
(1) Current investments	12,000
(2) Short-term loans and advances	16,000
(3) Other current assets	7,200
(4) Fixed assets - tangible	5,60,000
(5) Cash and cash equivalents	14,000
(6) Inventory	46,000
(7) Trade receivables	15,800
(8) Other non-current assets	18,000
(9) Non-current investments	26,000
(10) Fixed assets - intangible	1,20,000
(11) Long-term loans and advances	22,000

Answer:
Balance Sheet of Seema Limited as at 31-3-2017 - Assets Side

Particulars	Note No.	Amount (Rs.)	Amount (Rs.)
Assets:
(1) Non-current assets :
(a) Fixed assets :
(i) Tangible		5,60,000
(ii) Intangible		1,20,000
(b) Non-current investments		26,000
(c) Long-term loans and advances		22,000
(d) Other non-current assets		18,000	7,46,000
(2) Current assets :
(a) Current investments		12,000
(b) Inventories		46,000
(c) Trade receivables		15,800
(d) Cash and cash equivalents		14,000
(e) Short-term loans-advances		16,000
(f) Other current assets		7,200	1,11,000
			8,57,000

In simple words: This statement systematically categorizes Seema Ltd.'s assets into non-current and current sections, further breaking them down into specific types like tangible fixed assets, investments, and receivables, and then summing them up to show the total asset value.

🎯 Exam Tip: Accurately classifying each asset as either current or non-current and then placing it under the correct sub-heading (e.g., tangible fixed assets vs. intangible) is key to scoring in Schedule III questions.

 

Question 5.Following balances are taken from the books of Yuva Ltd. on 31-3-2017. Prepare statement indicating equity and liabilities of balance sheet as at 31-3-2017 as per schedule-III of Companies Act, 2013.

Balance	(Rs.)
(1) 1,30,000 equity shares of Rs. 5 each	6,50,000
(2) General reserve	70,000
(3) Provident fund	3,60,000
(4) Creditors	86,000
(5) Public deposit	3,26,000
(6) Outstanding rent	13,000
(7) Provision for tax	68,000
(8) Other long-term liabilities	15,000
(9) Temporary loan (Credit balance)	12,000

Answer:
Balance sheet of Yuva limited as at 31-3-2017

I.	Equity and Liabilities :		Note No.	Amount (Rs.)	Amount (Rs.)
	(1) Shareholders' Funds :
	(a) Share Capital (Equity share capital)			6,50,000
	(b) Reserve and Surplus (General reserve)			70,000	7,20,000
	(2) Non-Current Liabilities :
	(a) Long term borrowings (Public deposit)			3,26,000
	(b) Other long-term liabilities			15,000
	(c) Long term Provisions (Provident fund)			3,60,000	7,01,000
	(3) Current Liabilities :
	(a) Short term borrowing (Temporary loan)			12,000
	(b) Trade payables (Creditors)			86,000
	(b) Other current Liabilities (Outstanding rent)			13,000
	(c) Short-term Provisions (Provision for tax)			68,000	1,79,000
					16,00,000

In simple words: This balance sheet section organizes Yuva Ltd.'s equity and liabilities into shareholder's funds (share capital and reserves), non-current liabilities (long-term borrowings, other long-term liabilities, and provisions), and current liabilities (short-term borrowings, trade payables, other current liabilities, and short-term provisions) to present its financial structure.

🎯 Exam Tip: Ensure proper segregation of shareholder's funds, non-current liabilities, and current liabilities, accurately placing each given balance under its specific sub-heading for compliance with Schedule III.

 

Question 6.Following balance are taken from the books of Moon Ltd. Prepare balance sheet as on 31-3-2017 as per schedule-III of Companies Act, 2013.

Balance	(Rs.)
(1) Interest accrued	30,000
(2) Plant-machinery	15,00,000
(3) Equity share capital	15,00,000
(4) Bank balance and cash	67,500
(5) General reserve	30,000
(6) Closing stock	2,70,000
(7) Creditors	6,00,000
(8) Debtors	3,45,000
(9) Provision for tax	90,000
(10) 12% bank loan	1,95,000
(11) Non-current investments	45,000
(12) Electricity deposit	1,87,500
(13) Provident fund	30,000

Answer:
Balance sheet of Moon Limited as at 31-3-2017

I.	Equity and Liabilities :		Note No.	Amount (Rs.)	Amount (Rs.)
	(1) Shareholders' Funds :
	(a) Share Capital (Equity share capital)			15,00,000
	(b) Reserve and Surplus (General reserve)			30,000	15,30,000
	(2) Non-Current Liabilities :
	(a) Long-term borrowings (12% Bank loan)			1,95,000
	(b) Other long-term Liabilities			-
	(c) Long-term Provisions (Provident fund)			30,000	2,25,000
	(3) Current Liabilities :
	(a) Short-term borrowings			-
	(b) Trade Payables (Creditors)			6,00,000
	(c) Other current Liabilities			-
	(d) Short-term Provisions (Provision for tax)			90,000	6,90,000
Total					24,45,000
II.	Assets:
	(1) Non-Current Assets :
	(a) Fixed Assets :
	(i) Tangible (Plant-Machinery)			15,00,000
	(ii) Intangible			-
	(b) Non-Current Investment			45,000
	(c) Long-term Loan and Advance (Electricity deposit)			1,87,000	17,32,500
	(2) Current Assets :
	(a) Current Investment			-
	(b) Inventories (Closing stock)			2,70,000
	(c) Trade Receivables (Debtors)			3,45,000
	(d) Cash and cash equivalent (Bank balance and cash)			67,500
	(e) Short-term Loan and Advances			-
	(f) Other Current Assets (Interest accrued)			30,000	7,12,500
Total					24,45,000

In simple words: This balance sheet for Moon Ltd. correctly groups equity and liabilities into shareholder's funds, non-current, and current categories, while assets are classified into non-current (fixed assets, investments, long-term loans) and current (inventories, receivables, cash, other current assets), ensuring total equity and liabilities match total assets.

🎯 Exam Tip: For complex balance sheet preparations, always start by segregating all items into equity, non-current liabilities, current liabilities, non-current assets, and current assets, then apply sub-headings accurately for each.

 

Question 7.Under which head, will you show the following balances of profit and loss as per schedule III of Companies Act, 2013?
(1) Sales
(2) Salary
(3) Depreciation
(4) Bad debt recovered
(5) Debenture interest paid
(6) Audit fee
(7) Income of scrap
(8) Profit on sale of asset
(9) Advertisement expenses
(10) Contribution to provident fund
(11) Interest on bank overdraft
(12) Bank charges
(13) Bonus to employees
(14) Debenture discount written off
Answer:
The following balances will be categorized under these heads in the Statement of Profit and Loss:

Particulars	Head of Profit and Loss Statement
(1) Sales	Revenue from operation
(2) Salary	Employees benefit expenses
(3) Depreciation	Depreciation and amortized expenses
(4) Bad debt recovered	Other income
(5) Debenture interest paid	Financial cost (expense)
(6) Audit fee	Other expense
(7) Income of scrap	Other income
(8) Profit on sale of asset	Other income
(9) Advertisement expenses	Other income
(10) Contribution to provident fund	Employees benefit expense
(11) Interest on bank overdraft	Financial cost (expense)
(12) Bank charges	Other expense
(13) Bonus to employees	Employees benefit expense
(14) Debenture discount written off	Depreciations and amortized expense

In simple words: This classification places each profit and loss item under its appropriate main heading, such as Revenue from Operations, Employees Benefit Expenses, Financial Costs, or Other Income/Expenses, as per Schedule III.

🎯 Exam Tip: Precise categorization of each expense or income item under its correct Schedule III head (e.g., employee benefits, finance costs, other expenses) is crucial for accurate profit and loss statement preparation.

 

Question 8. From the books of Patel Ltd., the following balances are provided. Prepare the statement of profit and loss for the year ending on March 31, 2017, in accordance with Schedule-III of the Companies Act, 2013.

Balance	(Rs.)
(1) Sales of scrap	10,500
(2) Cost of material consumed	1,87,500
(3) Salary	78,000
(4) Interest paid	9,000
(5) Sales	3,81,000
(6) Change in stock of finished goods	12,000
(7) Office and administration expenses	15,600
(8) Depreciation	84,000
(9) Provision for tax on profit is	30%

Answer:

Below is the Statement of Profit and Loss for Patel Limited for the fiscal year concluding on March 31, 2017, structured as per the statutory requirements.

Particulars	Note No.	Amount (Rs.)	Amount (Rs.)
I. Revenue from operation (Sales)		3,81,000
II. Other income (Sales of scrap)		10,500
III. Total Revenue (I + II)			3,91,500
IV. Expenses :
Cost of material consumed		1,87,500
Change in stock of finished goods		12,000
Employees benefit expenses - Salary		78,000
Financial cost (Interest paid)		9,000
Depreciation		84,000
Other expenses (Office and administravive expense)		15,600
Total			3,86,100
V. Profit before tax (III - IV)			5,400
VI. Provision for tax (30% of profit)			1,620
VII. Profit after tax (V - VI) (Transferral to balance sheet)			3,780

In simple words: This statement summarizes the company's financial performance for the period ending March 31, 2017, detailing revenues, expenses, and ultimately the profit after tax, categorized according to Schedule III of the Companies Act, 2013.

🎯 Exam Tip: Ensure all income and expense items are correctly categorized and computed for an accurate profit before and after tax. Pay close attention to the provision for tax calculation based on the profit before tax.

 

Question 9. The balance sheet of Keyur Ltd. as of March 31, 2017, is presented below. Additional information includes a closing stock of Rs. 42,000 and a tax provision of 50% on net profit. Based on this, prepare the company's final accounts for the year ending on March 31, 2017, adhering to Schedule-III of the Companies Act, 2013. Notes to the accounts are not required.

Particulars	Debit (Rs.)	Credit (Rs.)
Equity share capital		2,40,000
Office and sales expenses	24,000
Purchase	4,26,000
10% Debenture		9,60,000
Sales
Software	1,20,000
Wages	24,000
Debenture Interest	12,000
Salary	3,00,000
Bank overdraft		14,400
land-building	2,28,000
Opening stock	36,000
Discount received		15,600
Debtors	1,80,000
	13,50,000	13,50,000

Answer:

The Statement of Profit and Loss for Keyur Limited for the year concluding on March 31, 2017, prepared as per Schedule-III of the Companies Act, 2013, is presented below:

Particulars	Note No.	Amount (Rs.)	Amount (Rs.)
I. Revenue from operation (Sales)		9,60,000
II. Other incomes (Discount received)		15,600
III. Total Revenue (I + II)			9,75,600
IV. Expenses :
Purchase		4,26,000
Changes in finished stock (Opening stock 36,000 - Closing stock 42,000)		(6,000)
Employees benefit expenses (Salary + wages)		3,24,000
Financial cost (Debenture interest)		12,000
Other expenses (Office and sales expenses)		24,000
Total Expenses			7,80,000
V. Profit before tax (III - IV)			1,95,600
VI. Provision for tax (50%)			97,800
VII. Profit after tax (V - VI) (Transferred to balance sheet)			97,800

In simple words: This Statement of Profit and Loss outlines Keyur Limited's financial performance, showing how revenues from operations and other incomes contribute to total revenue, from which various expenses are deducted to arrive at the profit before and after tax, all formatted per the Companies Act, 2013.

🎯 Exam Tip: Accurately calculate the 'Changes in finished stock' by subtracting closing stock from opening stock. Also, apply the given tax rate correctly to the profit before tax to determine the provision for tax.

 

Question 10. Given the trial balance of Parth Ltd. as of March 31, 2017, prepare the company's final accounts for the year ending on March 31, 2017, following Schedule-III of the Companies Act, 2013. No notes to accounts are necessary.

Particulars	Debit (Rs.)	Credit (Rs.)
Sales		11,25,000
Employee benefit expenses	1,95,000
Inventories	1,65,000
Finance costs	26,250
Security premium		60,000
Fixed assets - tangible	12,00,000
Trade payables		90,000
Equity share capital		7,50,000
Trade receivables	60,000
Other income		30,000
Long-term borrowings		5,25,000
Cash and bank balance	90,000
Depreciation	33,750
Cost of goods sold	6,00,000
Non-current investments	2,10,000
	25,80,000	25,80,000

Answer:

Below are the final accounts for Parth Limited, comprising the Statement of Profit and Loss for the year ended March 31, 2017, and the Balance Sheet as of March 31, 2017, prepared in strict compliance with Schedule-III of the Companies Act, 2013.

Statement of Profit and Loss for Parth Limited for the year ending on 31-3-2017

Particulars	Note No.	Amount (Rs.)	Amount (Rs.)
I. Revenue from operation - Sales		11,25,000
II. Other income		30,000
III. Total Revenue (I + II)			11,55,000
IV. Expenses:
Cost of goods sold		6,00,000
Employees benefit expenses		1,95,000
Financial cost		26,250
Depreciation		33,750
Other expenses		-
Total Expenses			8,55,000
V. Profit before tax (III - IV)			3,00,000
VI. Provision for tax			-
VII. Total Profit (Transferred to balance sheet)			3,00,000

Balance sheet of Parth Limited as on 31-3-2017

Particulars	Note No.	Amount (Rs.)	Amount (Rs.)
I. Equity and Liabilities :
(1) Shareholders' Funds :
(a) Share Capital (Equity share capital)		7,50,000
(b) Reserve and surplus (Profit + Securities premium)		3,60,000	11,10,000
(2) Non-Current Liabilities :
Long-term borrowings - loan		5,25,000	5,25,000
(3) Current Liabilities :
(b) Trade Payables		90,000
(d) Short-term provisions		-
Total			17,25,000
II. Assets:
(1) Non-Current Assets :
(a) Fixed assets - Tangible		12,00,000
(b) Non-current Investments		2,10,000	14,10,000
(2) Current Assets :
(b) Inventories		1,65,000
(c) Trade receivables		60,000
(d) Cash and cash equivalent (Cash and bank balance)		90,000	3,15,000
Total			17,25,000

In simple words: This solution provides a complete set of final accounts, including the Statement of Profit and Loss reflecting operational outcomes and the Balance Sheet showing the financial position, both adhering to the structural requirements of Schedule III of the Companies Act, 2013.

🎯 Exam Tip: Pay meticulous attention to classifying items between equity, liabilities, and assets, and further subdividing them into current and non-current categories. Ensure that the total of assets always equals the total of equity and liabilities in the balance sheet.