CBSE Class 12 Accountancy Financial Statements Of Company Worksheet Set B

Question: 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

Question: Assertion (A) Certain accounting conventions like conventions of consistency, conservatism, full disclosure, etc. are followed while preparing financial statements.
Reason (R) Use of accounting conventions makes the financial statements comparable, simple and realistic.
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
c) Assertion (A) is true, but Reason (R) is false
d) Assertion (A) is false, but Reason (R) is true
Answer: a

Question: Calculate revenue from operations from the 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

Question: If cash balance is given as ₹ 10,000; Trade payable ₹ 80,000; Inventory ₹ 1,00,000; Trade receivable ₹ 1,30,000; Prepaid expenses ₹ 20,000 and Creditors ₹ 60,000. What will be the amount of current assets?
a) ₹ 2,50,000
b) ₹ 2,60,000
c) ₹ 3,20,000
d) ₹ 2,40,000
Answer: b

Question: A company should disclose all the information in
a) statement
b) annual report
c) accounts book
d) None of these
Answer: b

Question: Which of the following items is shown in notes to accounts only?
a) Inventories
b) Current investments
c) Contingent liability
d) Building
Answer: c

Question: Which of the following statement(s) is/are incorrect?
(i) Statement of profit and loss shows financial performance of a company.
(ii) Format of statement of profit and loss is prepared as specified in Part II, Schedule III of Companies Act, 2013.
(iii) Share capital is included on assets side of the balance sheet.
(iv) General reserve can be used for distribution of dividend.
a) (i) and (ii)
b) (ii) and (iii)
c) (i), (iii) and (iv)
d) Only (iii)
Answer: d

CASE STUDY BASED QUESTIONS 

Financial statements are the basic sources of information to the shareholders and other external parties for understanding the profitability and financial position of any business concern. They provide information about the results of the business concern during a specified period of time in terms of assets and liabilities, which provide the basis for taking decisions. Thus, the primary objective of financial statements is to assist the users in their decision-making.
Financial statements provide the necessary information about the performance of the management to those parties interested in the organisation and help in taking appropriate economic decisions. It may be noted that the financial statements constitute an integral part of the annual report of the company in addition to the directors report, auditors report, corporate governance report, and management discussion and analysis. Though utmost care is taken in the preparation of the financial statements and provide detailed information to the users, they are not free from limitations.

Question: The primary objective of financial statements is to assist the users in their decision-making. The other objective of financial statements is
a) To abide by the laws of the country
b) To follow the accounting standards
c) To provide the information about the earning capacity of business
d) To learn the nature, objectives and types of financial statements it has to prepare including their contents, format, uses etc
Answer: c

Question: The interested parties of accounting information include
a) Shareholders
b) Government
c) Prospective investors
d) All the above
Answer: d

Question: Internal users of financial statements constitute
a) Owners
b) Employees
c) Investors
d) Government and tax authorities
Answer: b

Question: The major limitations of financial statements are
a) Aids trade associations in helping their members
b) Guide to the value of the investment already made
c) Do not reflect current situation
d) Report on stewardship function
Answer: c

The American Institute of Certified Public Accountants states the nature of financial statements as, “the statements prepared for the purpose of presenting a periodical review of report on progress by the management and deal with the status of investment in the business and the results achieved during the period under review. They reflect a combination of recorded facts, accounting principles and personal judgements”.
Thus, financial statements are the summarized reports of recorded facts and are prepared the following accounting concepts, conventions, postulates, accounting policies, accounting standards and requirements of Law.
Based on the above, questions: 

Question: Small items like pencils, pens, postage stamps, etc. are named as stationery and are treated as expenditure in the year in which they are purchased even though they are assets in nature. This is based on the principle of
a) Going concern concept
b) Realisation
c) Money measurement
d) Materiality
Answer: d

Question: Every company registered under The Companies Act 2013 shall prepare its balance sheet, statement of profit and loss and notes to account thereto in accordance with the manner prescribed by Companies Act, 2013 to harmonise the disclosure requirement with the accounting standards and to converge with new reforms as per
a) Schedule VI, Part I & II of Companies Act 2013
b) Schedule III, Part I & II of Companies Act 2013
c) The provisions of Memorandum of Association
d) As per Table F of Companies Act 2013
Answer: b

Question: While preparing statement of profit and loss the revenue is included in the sales of the year in which the sale was undertaken even though the sale price may be received over a number of years. This is based on which postulates of accounting?
a) Going concern concept
b) Realisation
c) Money measurement
d) Materiality
Answer: a

Question: Balance sheet and Statement of Profit & Loss are supported by Notes to Accounts. What do you mean by Notes to Accounts?
a) Details of items given in the Balance Sheet and Statement of Profit & Loss
b) Abstract of Memorandum of Association of a company
c) Provisions of Table F of Companies Act 2013
d) Provisions of Companies Act 2013
Answer: a

Ramnath Ltd is dealing in import ofnorganic food items in bulk. The company sells the items in smaller quantities in attractive packages. Performance of the company has been up to the expectations in the past. Keeping up with the latest packaging technology, the company decided to upgrade its machinery. For this , the finance manager of the company was asked to present the financial statements . He furnished the following particulars before you.
Capital advances                         Rs.25,00,000
Capital work in progress             Rs.1,50,00,000
Bank overdraft                            Rs.56,00,000
Unclaimed dividend                    Rs.35,000
Outstanding salary                      Rs.40,000
Trade payables                            Rs.48,000
Computer software                      Rs.50,00,000
Cheques in hand                          Rs.48,000
General Reserve                          Rs.38,00,000
Public deposits                            Rs.80,00,000
Patents                                       Rs.38,00,000

Question: Under which major heading and sub heading will Unclaimed dividend be presented in the Balance Sheet of the company as per Schedule III Part I of Companies Act 2013
a) Current liabilities – Short term provisions
b) Current liabilities – Short term borrowings
c) Current liabilities – Other current liabilities
d) Current liabilities – Trade payables
Answer: c

Question: Under which major heading and sub heading will Capital advances be presented in the Balance Sheet of the company as per Schedule III Part I of Companies Act 2013
a) Non-current assets – Long term loans & advances
b) Non-current assets – Fixed asset (Tangible)
c) Non-current assets – Long term borrowings
d) Non-current assets – Fixed asset (Intangible)
Answer: a

Question: Under which major heading and sub heading will Public deposits be presented in the Balance Sheet of the company as per Schedule III Part I of Companies Act 2013
a) Non-current liabilities – Long term borrowings
b) Non-current assets – Non-current investments
c) Non-current liabilities – Long term provisions
d) Non-current liabilities – Other non-current liabilities
Answer: a

Question: Under which major heading and sub heading will Cheques in hand be presented in the Balance Sheet of the company as per Schedule III Part I of Companies Act 2013
a) Current assets – Other current assets
b) Current assets – Cash & Cash equivalents
c) Current assets – Inventories
d) Current assets – Current investments
Answer: b