CBSE Class 12 Accountancy Financial Statements Of Company Worksheet Set 02

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

Question. Which of the following is the element of financial statements?
(a) Balance Sheet
(b) Profit & Loss A/c
(c) Both (a) and (b)
(d) None of these
Answer: (c)

Question. Which of the following is not required to be prepared under the Companies Act:
(a) Statement of Profit & Loss
(b) Balance Sheet
(c) Anditor’s Report
(d) Fund Flow Statement
Answer: (c)

Question. Equity \( Rs 90,000 \) Liabilities \( Rs 60,000 \) Profit of the year \( Rs 20,000 \). Then total assets will be :
(a) \( Rs 1.70,000 \)
(b) \( Rs 1,50,000 \)
(c) \( Rs 1,10,000 \)
(d) \( Rs 80,000 \)
Answer: (a)

Question. The reserve which is created for a particular (specific) purpose and which is a charge against revenue is called:
(a) Capital Reserve
(b) General Reserve
(c) Secret Reserve
(d) Specific Reserve
Answer: (d)

Question. An Annual Report is issued by a company to its:
(a) Directors
(b) Authors
(c) Shareholders
(d) Management
Answer: (c)

Question. The profit and loss disclosed by the accounts of a company is:
(a) Transferred to share capital account
(b) Shown under the head of ‘Current liabilities’ and provisions
(c) Shown under the head ‘Reserves and Surplus
(d) None of these
Answer: (c)

Question. 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 Asset
(d) None of these
Answer: (c)

Question. The term financial statements includes :
(a) Statement of Profit & Loss
(b) Balance Sheet
(c) Statement of Profit & Loss and Balance Sheet
(d) None of these
Answer: (c)

Question. Balance Sheet is a :
(a) Account
(b) Statement
(c) Both (a) and (b)
(d) All the above
Answer: (b)

Question. Financial statements are the product of accounting process.
(a) First
(b) Second
(c) End
(d) None of these
Answer: (c)

Question. Financial statements disclose :
(a) Monetary information
(b) Qualitative information
(c) Non-monetary information
(d) All the above
Answer: (a)

Question. Statement of Profit & Loss is also called………:
(a) Operating Profit
(b) Balance Sheet
(c) Income Statement
(d) Trading Account
Answer: (c)

Question. Preliminary expenses are shown in the Balance Sheet under the head:
(a) Non-current assets
(b) Current assets
(c) Non-current liabilities
(d) Deducted from securities premium reserve
Answer: (d)

Question. Debit Balance of Profit & Loss Statement will be shown on:
(a) Assets Side of Balance Sheet
(b) Liabilities Side of Balance Sheet
(c) Under the head Reserve & Surplus
(d) Under the head Reserves and Surplus as a negative item
Answer: (d)

Question. Patents and copyrights fall under the category of:
(a) Current Assets
(b) Liquid Assets
(c) Intangible Assets
(d) None of these
Answer: (c)

Question. Goodwill falls under which category of assets:
(a) Current Assets
(b) Tangible Assets
(c) Intangible Assets
(d) None of the above
Answer: (c)

Question. Contingent Liabilities are exhibited under the heading:
(a) Fixed Liabilities
(b) Current Liabilities
(c) As a footnote
(d) None of these
Answer: (c)

Question. Provision for Provident Funds is shown in the Balance Sheet of a company under the head :
(a) Reserves and Surplus
(b) Non-current Liabilities
(c) Provision
(d) Contingent Liabilities
Answer: (b)

Question. Preliminary Expenses are shown in the Balance Sheet under which head ?
(a) Fixed Assets
(b) Reserves and Surplus
(c) Loans & Advances
(d) None of these
Answer: (d)

Question. Financial Statements are :
(a) Anticipated facts
(b) Recorded facts
(c) Estimated facts
(d) None of these
Answer: (b)

Question. The term current assets includes :
(a) Stock
(b) Debtors
(c) Cash
(d) All of these
Answer: (d)

Question. Which of the following is not a part of financial statement of a company ?
(a) Profit & Loss A/c
(b) Balance Sheet
(c) Ledger Account
(d) Cash Flow Statement
Answer: (c)

Question. Under which heading of Balance Sheet is general reserve shown:
(a) Miscellaneous Expenditure
(b) Share Capital
(c) Reserves & Surplus
(d) None of these
Answer: (c)

Question. Current Assets on the Assets side of Balance Sheet of a Company includes:
(a) Sundry Debtors
(b) Cash in hand
(c) Stock
(d) All of these
Answer: (d)

Question. As per provisions of Companies Act, 2013 under which Section, the final accounts of a company is prepard :
(a) 128
(b) 210
(c) 129
(d) 212
Answer: (c)

Question. According to which part of Schedule III of the Indian Companies Act, 2013, Indian companies have to prepare Balance Sheet:
(a) Part 1
(b) Part 2
(c) Part 3
(d) Part 4
Answer: (a)

Question. Balance sheet of companies is now prepared in :
(a) Horizontal Form
(b) Vertical Form
(c) Either (a) or (b) Form
(d) None of these
Answer: (b)

Question. Goodwill of a company is shown on the assets side of the Balance Sheet under the head.
(a) Current Assets
(b) Non-current Assets
(c) Miscellaneous Expenditure
(d) None of these
Answer: (b)

Question. The form of Balance Sheet as per Companies Act, 2013 is:
(a) Horizontal
(b) Horizontal or Vertical
(c) Vertical
(d) None of these
Answer: (c)

Question. Which of the following assets is not shown undeer the head ‘Fixed Asset’ in the Balance Sheet ?
(a) Goodwill
(b) Bills Receivable
(c) Buildings
(d) Vehicle
Answer: (b)

Question. Securities Premium Account is shown on the liabilities side in the Balance Sheet Under heading
(a) Reserves and Surplus
(b) Current Liabilities and Provisions
(c) Share Capital
(d) Contingent Liabilities
Answer: (a)

Question. Debentures are shown in the Balance Sheet under the head of:
(a) Short-term Loan
(b) Secured Loan
(c) Current Liability
(d) Share Capital
Answer: (b)

Question. Divident is usually paid :
(a) On Authorised Capital
(b) On Ussued Capital
(c) On Paid-up Capital
(d) On Called-up Capital
Answer: (c)

Question. Amount set aside to meet losses due to bad debts is called:
(a) Reserve
(b) Provision
(c) Liability
(d) None of these
Answer: (b)

Question. Which Section of the Companies Act, 2013 requires that the Balance Sheet to be prepared in prescribed form ?
(a) Section 128
(b) Section 130
(c) Section 129
(d) Section 212
Answer: (c)

Question. The prescribe from the Balance Sheet has given in the Schedule:
(a) VI Part I
(b) VI Part II
(c) III Part I
(d) VII Part IV
Answer: (c)

Question. Share capital is shown in Balance Sheet under. the head ?
(a) Authorised Capital
(b) Issued Capital
(c) Paid-up Capital
(d) Shareholders’ Funds
Answer: (d)