Financial Statement of Company PDF

12th class financial statements of a company CA/CMA Santosh kumar
FINANCIAL STATEMENTS OF A COMPANY

MEANING OF FINANCIAL STATEMENTS :- Financial Statements are summarised statements of accounting
data prepared at the end of an accounting process, i.e., after preparing Trial Balance by an enterprise. It is a
medium of communicating accounting information to the internal and external users. A set of financial
statements as per Section 2(40) of the Companies Act, 2013 include:
1. Balance Sheet: It is a statement of Assets and Liabilities, i.e., financial position of an enterprise at a given
date. It is also known as Position Statement.
2. Statement of Profit and Loss: It shows the financial performance, i.e., result of business operations during
an accounting period. It is also known as Income Statement.
3. Notes to Accounts: Balance Sheet and Statement of Profit and Loss are supported by the notes giving details
of items in the Balance Sheet and Statement of Profit and Loss.
4. Cash Flow Statement: It is a statement prepared in accordance with AS-3 to show inflow and outflow of
Cash and Cash Equivalents.
Section 129 of the Companies Act, 2013 requires the company to prepare its financial statements every year
in the prescribed form, i.e., Schedule III of the Companies Act, 2013.
CHARACTERISTICS AND NATURE OF FINANCIAL STATEMENTS
Characteristics of Balance Sheet:
1. It shows the financial position of a company at a specific point of time.
2. It is prepared by taking the year-end balances of assets, liabilities and shareholders' funds.
3. The accounts in the Balance Sheet may have an opening balance, transactions during the year and closing
balance.
Characteristics of Statement of Profit and Loss
1. It shows the financial performance of a company, i.e., revenues, expenses and profit or loss for the period.
2. The transactions are expressed in terms of money.
3. It is prepared for a past period and thus, is a historical document.
4. It is for a specific accounting period.
Nature of Financial Statements
The information in the Financial Statements is the result of a combination of:
(i) Recorded facts: The term 'recorded facts mean': recording of transactions based on evidences in
the books of account. For example, amounts of cash in hand, cash at bank, debtors, sales,
purchase, etc. are recorded facts.
(ii) Conventions: Accounting conventions are followed while preparing financial statements. For
example, because of convention of 'conservatism, provision is made for expected losses but
expected profits are ignored. It mean that real financial performance and financial position of the
business may be better than what is shown by the financial statements. The use of accounting
conventions makes financial statements reliable, understandable and comparable.
(iii) Accounting Concepts: Financial Statements are prepared by following the accounting concepts.
For example, under the Going Concern Concept, it is assumed that the business shall continue for
a foreseeable future. The use of accounting concepts also makes the financial statements
reliable, understandable and comparable.
CONCEPTONLINECLASSES.COM 1 MOB. 9999631597, 9811455109, 9999358518, 8448322142

(iv) Personal Judgments: Personal judgments also have an important bearing on financial
statements. For example, the choice of selecting a method of depreciation or selection of the
inventory valuation method also depends on the personal judgment of the management.
(v) Source of Financial Information: Financial Statements are the source of financial information on
the basis of which conclusions are drawn about the profitability and the financial position of a
company.
OBJECTIVES OF FINANCIAL STATEMENTS : The Objectives of Financial Statements are:
1. To provide financial data on economic resources and obligations of an enterprise.
2. To show implications of operating profit on the financial position of an enterprise.
3. To provide sufficient and reliable information to various parties interested in financial statements. 4. To
present a true and fair view of the business.
5. To serve as the basis of future operations.
ESSENTIALS OF FINANCIAL STATEMENTS
(i) Factual Information: Financial Statements should disclose the factual information about the financial
position of the company'.
(ii) Understandability: Financial Statements should be prepared following the accepted accounting principles
for better understanding of the users.
(iii) Comparable: Financial Statements should disclose the information in a manner that the user can compare
the information of the same entity over years (intra-firm comparison) and also compare the reporting
company's financial information with that of others (inter-firm comparison).
(iv) Verifiable: Information disclosed by the Financial statements should be verifiable from the records Of the
company.
(v) Relevant: Information disclosed by the Financial Statements should be in accordance with the legal
requirements. It is so because they are considered relevant to the user' having been set after thorough public
debate.
(vi) Timeliness: Financial Statements should be prepared and presented within a reasonable period after the
accounting period is over. Financial Statements may lose their relevance because of undue delay caused in the
release of such information.
PARTIES INTERESTED IN FINANCIAL STATEMENTS OR USERS OF FINANCIAL STATEMENTS
Users of Financial Statements may be categorised into
(1) Internal Users and (2) External Users.
1. Internal Users:
(i) Shareholders: Shareholders contribute capital in the business and thus are always exposed to risk. In view
of the risk involved, they are always interested in knowing the profitability, financial strength and cash position
of the company.
(ii) Management: Management has the responsibility to not only safeguard the investment but also to
increase its value by managing the business efficiently and maximising profit. The management makes
extensive use of accounting information to arrive at informed decisions such as determination of selling price,
cost controls and reduction, investment into new projects, etc.

(iii) Employees: Employees are entitled to bonus at the end of the year besides the salary and wages taken
every month. Bonus is linked to the profit earned by an enterprise. Thus, the employees are interested in
financial statements.
2. External Users:
(i) Banks and Financial Institutions: Banks and Financial Institutions provide loans to the businesses. It is
natural that the Banks and Financial Institutions will watch the performance of the business to know whether
it is making progress as projected to ensure the safety and recovery of the loan advanced. Cash Flow
Statement and Segment Reports enable them to assess cash position and whether the business segments are
making progress as planned and projected.
(ii) Investors and Potential Investors: Investment involves risk and the investors do not have direct control
over business affairs. Therefore, they rely on the available accounting information and seek answers to
questions such as: What is the earning capacity of the enterprise and how safe is its investment?
(iii) Creditors: Creditors are the parties who supply goods or services on credit. Before granting credit,
creditors satisfy themselves about the creditworthiness of the business. The financial statements help them
immensely in making such an assessment.
(iv) Government and its Authorities: The government makes use of financial statements to compute national
income accounts and other information. The information so available enables it to take policy decisions.
Government authorities assess the correct tax dues from an analysis of financial statements.
(v) Securities and Exchange Board of India (SEBI): SEBI and other agencies like to study the financial
statements to see whether a company is within its limit and the interest of the investors is well protected.
LIMITATIONS OF FINANCIAL STATEMENTS
(i) Historical Records: Shareholders, investors and lenders, etc., are more interested in knowing the likely
position of business enterprises in the future. The Financial Statements are not of much help as the
information given in these statements is historical in nature.
(ii} Affected by Estimates: Financial Statements are the outcome of accounting concepts and conventions
combined with estimates. Stock valuation, provision for depreciation, etc., are based on estimates. Therefore,
financial statements are not free from bias.
(iii) Different Accounting Practices: The Financial Statements can be drawn up on the basis of different
accounting practices. For example, depreciation can be provided either on straight-line basis or on written-
down value basis. Profit earned or loss incurred will be different when different practices are followed.
(iv) Qualitative Elements are Ignored: Financial Statements portray the position in monetary terms. The profit
or loss position or the financial position excludes things which cannot be expressed or recorded in monetary
terms. Financial statements ignore the qualitative elements such as quality of management, quality of staff,
public relations, etc.
(v) Price Level Changes are Ignored: Different assets are shown at historical cost. Financial Statements,
therefore, ignore the price level changes or present value of the assets.
(vi) Cannot Meet the Purpose of all Parties: The number of parties interested in the Financial Statements is
large and their interests vary. Financial Statements, therefore, cannot meet the purpose of all interested
parties.
CONTENTS OF ANNUAL REPORT : The annual report of a company, as per law, should disclose the prescribed
information to enable the users to make informed judgments and decisions. The information is disclosed in the
Financial Statements, Board Report and by a separate statement being part of the annual report.
A set of annual report of a company has:

1. A Report by the Board of Directors.
2. Auditors' Report to the Shareholders.
3. Financial Statements:
(i) Balance sheet as at the end of the financial year;
(ii) Statement of profit and loss for the year ended; and
(iii) Cash flow statement.
4. Notes to Accounts:
(i) Accounting Policies followed by the company;

(ii) Notes to Accounts giving details of line items in Balance Sheet and Statement Profit and Loss;
(iii) Explanatory notes explaining significant transactions and events; and
(iv) Additional information required to be disclosed as per Schedule III of the Companies Act, 2013.
Let’s start detail discussion on Format of FINANCIAL STATEMENTS:
BALANCE SHEET:- Balance Sheet is a financial statement that summarises company's Equity (Shareholders'
Funds), Liabilities and Assets at a specific point of time. These three Balance Sheet segments show what the
company owns and what it owes. Balance Sheet of a company is prepared following the same principles as are
followed in preparation of Balance Sheet of a sole proprietorship or partnership firm. However, it differs from
them in presentation. Balance Sheet of a company is prepared in the prescribed format, i.e., Schedule III, Part
I, of the Companies Act, 2013.
FORMAT OF BALANCE SHEET:
Particulars Note Figures as at the Figures as at the

No. end current end of previous
reporting period reporting period
A. Equity and Liabilities
1. Shareholder’s fund ------- -------
(a) Share capital 1 ------- -------
(b) Reserves and surplus 2 ------- -------
(c) Money received against share warrants 3
(2) Share application money pending allotment 4 ------ -------

(3) Non-current liabilities
(a) Long-term borrowings 5 ------- -------
(b) Deferred tax liabilities (Net) 6 ------- -------
(c) Other long term liabilities 7 ------- -------
(d) Long-term provisions 8 ------- -------
(4) Current liabilities

(a) Short-term borrowings 9
(b) Trade payables 10
(c) Other current liabilities 11
(d) Short-term provisions 12
Total (A) ------- -------
B. Assets
(1) Non-current assets
(a) Fixed assets
(i) Tangible assets 13 ------- -------
(ii) Intangible assets 14 ------- -------
(iii) Capital work-in progress 15 ------- -------
(iv) Intangible assets under development 16 ------- -------
(b) Non-current investments 17 ------- -------

(c) Deferred tax assets (net) 18 ------- -------

(d) Long-term loans and advances 19 ------- -------
(e) Other non-current assets 20 ------- -------
(2) Current assets
(a) Current investments 21 ------- -------
(b) Inventories 22 ------- -------
(c) Trade receivable 23 ------- -------
(d) Cash and cash equivalent 24 ------- -------
(e) Short-term loans and advances 25 ------- -------
(f) Other current assets 26 ------- -------
Total (B) ------- -------
MEANING OF KEY TERMS USED IN BALANCE SHEET
1. Shareholders' Funds: Shareholders' Funds are the funds belonging to the shareholders of the company.
They consist of Share Capital; Reserves and Surplus and Money received against Share Warrants.
(a) Share Capital ; It is the amount received by the company as capital. It includes both Equity Share Capital
and Preference Share Capital.
(b) Reserves and Surplus:
Reserves : It is the amount set aside out of Surplus, i.e., Balance in Statement of Profit and Loss or amount
received as Securities Premium. A reserve may be free reserve or non free reserve. Examples of reserves are
security premium reserve, capital reserve, revaluation reserve, tax reserve, shares option outstanding account(
also called ESOP) etc.
Surplus ; It is the amount of accumulated profit which may be appropriated towards reserve or for
payment of dividend.
(c) Money Received against Share Warrants . It is the amount received against Share Warrants. Share
Warrants are the financial instruments which give the holder the right to acquire Equity Shares in the company
at a specified date and at a specified rate.
2. Share Application Money Pending Allotment ; It is the amount received as share application and against
which the company will make allotment.
3. Non-Current Liabilities ; Non-current Liabilities are defined in Schedule III of the Companies Act, 2013 as
those liabilities which are not current liabilities. These are sub-classified into: Long-term Borrowings; Deferred
Tax Liabilities (Net); Other Long-term Liabilities; and Long-term Provisions.
(a) Long-term Borrowings ; . Long-term borrowings are the borrowings which as on the date of borrowing are
repayable after more than 12 months from the date of Balance Sheet or after the period of Operating Cycle.
For e.g. Debentures, long term loan, secured loan, Bonds, unsecured loan, mortgage loan, public deposits,
term loan, bonds etc.
(b) Deterred Tax Liabilities (Net); It is the amount of tax on the temporary difference between the accounting
income and taxable income. It is only a book entry and not an actual liability. It arises when accounting income
is more than the taxable income.( detail discussion is not in your syllabus)
(c) Other Long-term Liabilities: They are the Long-term Liabilities other than Long-term Borrowings of the
company. e.g premium payable on redemption of debentures.
(d) Long-term Provisions:- These are the provisions for liabilities that will be payable after 12 months from the
date of Balance Sheet or after the period of Operating Cycle. Provident fund, employees profit sharing fund,
gratuity fund, Provision for Earned Leave and Provision for Warranty etc.

4. Current Liabilities: current liabilities are those liabilities which are:
(a) expected to be settled in company's normal Operating Cycle; or
(b) due to be settled within 12 months after the reporting date. (Reporting date is the date on which financial
statements are prepared); or
(c) held primarily for the purpose of being traded; or
(d) there is no unconditional right to defer settlement for at least 12 months after the reporting date.
Note: Operating Cycle: It is the time between the acquisition of assets for processing and their realisation into
Cash and Cash Equivalents. Where the Operating Cycle cannot be identified, it is assumed to be a period of 12
months. Operating Cycle can be different for different businesses.
Current Liabilities are classified into Short-term Borrowings; Trade Payables; Other Current Liabilities; and
Short-term Provisions.
(a) Short-term Borrowings; These are the borrowings that are repayable within 12 months from the date of
Balance Sheet or within the period of Operating Cycle. For e. g. Bank overdraft, cash credit, loans repayable
within 12 months, Loans repayable on demand etc.
(b) Trade Payables:- These are the amounts payable within the period of 12 months from the date of Balance
Sheet or within the period of Operating Cycle for goods purchased or services taken in the ordinary course of
business. It includes Bills Payable and Sundry Creditors.
(c) Other Current Liabilities; These are short-term liabilities, other than short-term borrowings, trade payables
and short-term provisions. E.g. outstanding expenses, advance income, unpaid dividend, income tax payable,
interest accrued and due, interest accrued but not due, Share Application money received by the company and
which is to be refunded to the applicants, i.e., against which shares will not be allotted to the applicants,
Current Maturities of Long-term Debts, Unpaid matured deposits and interest accrued thereon, Unpaid
matured debentures and interest accrued thereon, Calls -in-Advance, Provident Fund Payable, ESI Payable,
Central Sales Tax Payable, and VAT Payable, etc.
(d) Short-term Provisions; These are provisions for liabilities that will be payable within 12 months from the
date of Balance Sheet or within the of Operating Cycle. E.g. provision for tax, proposed dividend etc.
5. Non-current assets: Non-current assets are those assets which are not current assets. These are sub-
classified into: Fixed Assets; Non-current Investments; Deferred Tax Assets (Net); Long-term Loans and
Advances; and Other Non-current Assets.
(a) Fixed Assets: they can further be divided into following parts:
(i) Tangible Assets: These are the assets which have physical existence, i.e., can be seen and touched.
Examples are: land, building, machinery and computers, etc.
(ii) Intangible Assets: These are the assets which do not have physical existence, i.e., cannot be seen and
touched. Examples are: Goodwill, Brands/Trademarks, Computer Software, Mastheads and Publishing Titles,
Mining Rights, Copyrights, Patents and other Intellectual Property Rights, Services and Operating Rights,
Recipes, Formulae, Models and Designs, Licence and Franchise, etc.
(iii) Capital Work-in-Progress: Capital Work-in-Progress means expenditure incurred on construction or

development of tangible assets not yet complete.
(iv) Intangible Assets Under Development: Intangible Assets Under Development means expenditure
incurred on development of intangible assets not yet complete.

(b) Non-current Investments. Non-current Investments are those investments that are invested to be
held for a period of more than 12 months from the date of Balance Sheet or for a period that is more
than the period of Operating Cycle.
(c) Deferred Tax Assets (net); It is the amount of tax on the temporary difference between the
accounting income and taxable income. It is only a b ok entry and not an actual asset. It arises when
accounting income is less than the taxable income. ( detail discussion is not in your syllabus)
(d) Long-term Loans and Advances; Long-term Loans and Advances are loans and advances given by the
company that are repayable or adjustable after 12 months from the date of Balance Sheet or after the period
of Operating Cycle e.g. Capital Advances for acquiring fixed assets, security deposit for electricity and
telephone, long-term loans to employees and long-term advances to suppliers etc.
(e) Other Non-Current Assets; All non-current assets that are not shown or classified under the above heads
are Other Non-current Assets. E.g discount on issue of debentures to be written off after 12 months, Long-
term Trade Receivables etc.
(6) Current assets; Current assets are those assets which are:
(a) expected to be realised in or intended for sale or consumption in normal Operating Cycle of the
company; or
(b) held primarily for the purposes of trading; or
(c) expected to be realised within 12 months from the reporting date or closing date; or
(d) Cash and Cash Equivalent unless it is restricted from being exchanged or used to settle a liability
for at least 12 months after the reporting date.
Current Assets are classified into Current Investments; Inventories; Trade Receivables; Cash and Cash
Equivalents; Short-term Loans and Advances; and Other Current Assets.
(a) Current Investments ; Current Investments are those investments that are invested to be held for a
period of less than 12 months from the date of Balance Sheet or within the period of Operating Cycle.
(b) Inventories: Inventories (stock) is a tangible asset held: (i) for the purpose of sale in the normal
course of (ii) for the purpose of using it in the production of goods meant for sale or service to be
rendered. In case of trading company, it comprises of stock of goods traded in.
In case of a manufacturing company, it comprises of raw materials, work-in-progress and finished
goods. Inventories are valued at lower of cost or net realisable value, i.e., market price.
(c) Trade Receivables: Trade receivables are the amounts receivable within 12 month from the
reporting date or within the period of Operating Cycle for sale of goods or services rendered in the
normal course of business. It includes Bills Receivable and Sundry Debtors.
(d) Cash and Cash Equivalents: It includes cash in hand and balance with bank, Cheques drafts on hand,
Earmarked balance with banks ( for example, Unpaid Dividend), Bank Deposits with more than 12 month
maturity
(e) Short-term Loans and Advances; Short-term Loans and Advances are loans and advances given by the
company that are receivable or adjustable within 12 months from the date of Balance Sheet or within the
period of Operating Cycle.
(f) Other Current Assets; All other current assets that are not shown or classified under the above heads
are shown as Other Current Assets. E.g. prepaid expenses, accrued income etc

FORMAT OF STATEMENT OF PROFIT AND LOSS.
Particulars Note Figures for Figures for

No. the current the previous
reporting reporting
period period
Revenue from operations ------ ------
Other income ------ ------
Total revenue (I+II) ------ ------
Expenses:
Cost of materials consumed ------ ------
Purchases of Stock-in-Trade ------ ------
Changes in investments of finished goods, work-in- ------ ------
progress and Stock-in-Trade
Employee benefits expense
Finance costs
Depreciations and amortization expenses
Other expenses
Total expenses ------ ------
Profit before tax ------ ------
Less:Tax expense ------ ……
Profit or loss for the period …… …..
DISCUSSION OF IMPORTANT TERMS USED:
(i) Revenue from Operations :- It is the revenue earned by the company from its operating activities, i.e.,
business activities carried on by the company to earn profit.(net sales(sales – sales return), for a manufacturing
company, fees earned by a service company, interest and dividend earned by a financial company etc)
(ii) Other Income; It is the revenue earned by the company from the sources other than its operating activities.
E.g. discount received, profit on sale of fixed assets, commission received, bad debts recovered, interest
earned on fixed deposits etc.
(iii) Cost of Materials Consumed; It is the aggregate of cost of raw materials and other materials used in
manufacture of goods.
Cost of material consumed= opening stock of raw material + purchase of raw materials – closing stock of
raw materials.
(iv) Purchase of Stock-in-Trade; It means purchases of goods for resale, i.e., goods purchased on which no
further process is carried before sale.
(v) Change in Inventories of Finished Goods, WIP and Stock-in-Trade; . It is the difference between the
opening inventories and closing inventories of Finished Goods, WIP and Stock-in-Trade. It is shown separately
in the Notes to Accounts and one single amount on the face of the Statement of Profit and Loss.
(vi) Employees Benefit Expenses; These are the expenses incurred for the benefit of employees.
Examples are: wages, salaries, bonus, staff welfare and medical reimbursement, etc.
(vii) Finance Costs; These are the cost incurred by the company on the borrowing, i.e., loans taken by it. E.g
interest paid on loans, loan processing fees, discount/loss on issue of debentures etc.
Note: bank charges are not shown under finance cost. It is shown under “other expenses” because they are
paid for services availed from bank.

(viii) Depreciation and Amortisation; Depreciation is allocation of cost of fixed asset over its useful life.
Amortisation is the term associated with writing off intangible assets.
(ix) Other Expenses; Expenses that do not fall in the above classifications are shown as Other Expenses. e.g
Administration Expenses, Selling and Distribution Expenses and General Expenses, carriage inward, carriage
outward, Audit fees etc.
IMPORTANT NOTE:
Schedule III of the Companies Act, 2013 requires that details of entries, i.e., line items in the Balance Sheet
and Statement of Profit and Loss be given in the Notes to Accounts which should be cross referenced with the
line item in the financial statement. For example, Share Capital shall be shown as one amount in the Balance
Sheet and details thereof (Equity Share Capital and Preference Share Capital, authorised capital, issued capital
and subscribed capital) shall be given in the Notes to Accounts.
Question 1. Sony Ltd. has an opening debit balance of 1,00,000 in Surplus, i.e., Balance in Statement of Profit
and Loss. During the year ended 31st March, 2019, it earned a profit of 3,00,000. Prepare Note to Accounts on
Reserves and Surplus showing the amount to be carried to Balance Sheet.
Question 2. HP Computers Ltd. has an opening credit balance of Securities Premium Reserve and Surplus, i.e.,
Balance in Statement of Profit and Loss of 2,00,000 and 1,00,000 respectively. During the year, it incurred a
loss of 1,50,000. How will it be shown in Note to Accounts on Reserves and Surplus?
Question 3. Casio Machines Ltd. has an opening credit balance of ₹ 5,00,000 in Securities premium Reserves
and also debit balance of ₹ 10,00,000 in Surplus, i.e., Balance in Statement of Profit and Loss in Reserves and
Surplus. During the year ended 31st March loss of ₹ 15,00,000 was incurred. How will it be shown in Note to
Accounts on Reserves and Surplus?
Solution: Note to Accounts
Particulars ₹
Reserves and Surplus
(a)Securities Premium Reserve 5,00,000
(b) Surplus, i.e., Balance in Statement of Profit and Loss 10,00,000
Opening Balance 15,00,000
Add: Profit (Loss) for the year Balance 25,00,000
Total (a + b) 20,00,000
Question 4. Samsung One Ltd. has opening credit balance of 5,00,000 in Surplus, i.e., Balance in Statement of
Profit and Loss. Debenture Redemption Reserve has opening balance of 1,25,000. It earned a profit of Rs
2,00,000 for the year ended 31st March, 2019. It was decided to transfer 50,000 to Debenture Redemption
Reserve and also proposed a final dividend of 1,00,000 on its Equity Shares. Show the appropriations by
preparing Note to Accounts on Reserves and Surplus. How will be Proposed Dividend shown in the Note to
Accounts?
Question 5. COC Ltd. has opening credit balance of 5,00,000 in Surplus, i.e., Balance in Statement of Profit and
Loss. Debenture Redemption Reserve has opening balance of 1,25,000. It earned a profit of Rs 2,00,000 for the
year ended 31st March, 2019. It was decided to transfer 50,000 to Debenture Redemption Reserve and also
proposed a final dividend of 1,00,000 on its Equity Shares against last year proposed dividend of Rs 90,000.
Show the appropriations by preparing Note to Accounts on Reserves and Surplus. How will be Proposed
Dividend shown in the Note to Accounts?
Question 6. Premium Stores Ltd. has the following balances in Reserves and Surplus: Debenture Redemption
Reserve 5,00,000 Securities Premium Reserve 6,00,000 Surplus, i.e., Balance in Statement of Profit and Loss
(1,50,000) During the year ended 31st March, 2019, it earned a profit after tax of 5,00,000. It decided to
appropriate 1,00,000 towards Debenture Redemption Reserve, 1,25,000 towards General Reserve and declare

a final dividend of 75,000. Show how it will be shown in the Note to Accounts on Reserves and Surplus? Also,
show how will Proposed Dividend be shown in the Balance Sheet?
Question 7. Classify the liabilities given below as Non-current Liabilities and Current Liabilities giving reasons
for such classification:
Particulars Operating Cycle Expected

(in month) period of
payment (in
month)
(i) Trade Payables 10 8
(ii) Trade Payables 10 12
(iii)Trade Payables 10 15
(iv) Trade Payables 18 15
(v) Trade Payables 18 24
Solution:
(i) It is a current liability because expected settlement time is 8 months which is less than a period of 12
months (second condition) and also less than the period of operating cycle, i.e., 10 months.
(ii) It is a current liability because expected settlement time is 12 months which is equal to a period of 12
months (second condition) although higher than the period of operating cycle, i.e., 10 months.
(iii) It is a non-current liability because expected settlement time is 15 months which is more than the
period of 12 months (second condition) and also more than the period of operating cycle, i.e., 10 months.
(iv) It is a current liability because expected settlement time is 15 months which is more than the period
of 12 months (second condition) but less than the period of operating cycle, i.e., 18 months (first
condition).
(v) It is a non-current liability because expected settlement time is 24 months which is more than the
period of 12 months(second condition) and also more than the period of operating cycle, i.e., 18 months
(first condition).
Question 8. Axis Consultants Ltd. issued 10,000; 9% Debentures of 100 each on 1st October, 2013 to be
redeemed on 30th September, 2020. How will it be classified or shown in the Balance Sheet as at 31st
March, 2020. Give reason.
A part of long-term borrowing may become due for repayment within 12 months of the date of Balance
Sheet or within the period of Operating Cycle. In such a case, part of the borrowing that becomes due for
repayment is shown under major head 'Current Liabilities' and sub-head 'Other Current Liabilities' as
'Current Maturities of Long-term Debts'.
Question 9. COC Consultants Ltd. issued 10,000; 9% Debentures of 100 each on 1st October, 2013. Out of
it Rs 2,00,000 to be redeemed on 30th September, 2019 and remaining on 31 st March 2026. How will it be
classified or shown in the Balance Sheet as at 31st March, 2019. Give reason.
Difference between Current Maturities of Long-term Debts and Short-term Borrowings.
Current Maturities of Long-term Debts is that part of long-term borrowings which is due for payment
within 12 months of the date of Balance Sheet or within the period of Operating Cycle. For example,
Debentures issued on 1st April, 2015 for Rs 5,00,000 redeemable in five equal yearly instalments starting
from 1st April 2016. 1,00,000 redeemable within 12 months of the date of Balance Sheet i.e., as at 31st
March, 2016 (assuming Operating Cycle is of 12 months or less; will be shown as 'Current Maturity of
Long-term Debts and balance 4,00,000 will be shown as 'Long-term Borrowings'. Short-term Borrowings
are the borrowings of the company that are due for ,payment within 12 months or within the period of

Operating Cycle from the date of loan. For example, debentures issued to be redeemed in 10 months
from the date of issue is Short-term Borrowing.
Interest Accrued but not Due an Borrowings: Interest accrued but not due means interest is provided in
the books of account but it has not become due for payment. For example, interest is payable half-yearly
in June and December. If the company closes its books on 31st March, it will provide interest for the
quarter January to March following the accrual concept of accounting. But the interest will become due
for payment on 30th June along with the interest for the quarter April to June. The interest for the
quarter January to March will be classified as 'Interest accrued but not due'.
(iii) Interest Accrued and Due on Borrowings: Interest accrued and due means interest is provided in the
books of account and is due for payment. In the above example, interest for half-year June to December
is provided in the books of account but has not been paid. It is 'Interest accrued and due' and shown as
Other Current Liability. Remember: Interest Accrued and Due and Interest Accrued but not Due on
borrowings are shown as Other Current Liabilities.
Liability and Provision :The two terms 'Liability' and 'Provision' differ from each other as follows:
Liability: The term 'Liability' is used where the amount of the liability is known. For example, salary for
March, 2016 amounting to 1,00,000 is payable. It is classified or shown as outstanding liability because
the liability and the amount is known,
Provision: The term 'Provision' is used where the liability is known to exist but the amount is not known.
It is estimated with substantial accuracy. Provision is a charge against profit, i.e., is debited to Statement
of Profit and Loss. Examples of Provision: Provision for Doubtful Debts, Provision for Discount on Debtors
Provision for Depreciation, Provision for Warranties, Provision for Repairs, Provision for Expenses (say
Electricity), Provision for Tax and Proposed Dividend.
Difference between Provision and Reserve
Basis Provision Reserve

1. Nature It is a liability or diminution of It is shareholders money
value of It is shareholders' money.
assets or estimated loss.
2. Purpose Provision is created for some Reserve may be created for
specific Reserve may be created for specific purpose like Debenture
a specific purpose say depreciation, Redemption Reserve and it may
expenses, etc. not be created for a specific
purpose like general reserve.
3. Charge Vs. Provision is a charge against the Reserve is an appropriation of
Appropriation profit Reserve is an appropriation profit. It is made only when there
of profit. is profit.
4. Disclosure in Income It is shown under Expenses in the It is shown in balance sheet under
Statement Statement of Profit and Loss. Shares holder Fund.
5. Disclosure in Balance Provisions are shown under Long- Reserve is shown as a separate
Sheet term as a Provisions or Short-term item under ‘Reserve and Surplus’
Provisions or as deduction from in the Equity and Liabilities part of
the value of concerned assets in the balance sheet.
the assets part of Sheet. the
Balance Sheet.
6. Investment Outside Amount of provision cannot be Reserve can be invested outside

Business invested It always remains in the the outside business but in that
business. case it is known as fund.
7.Legal Requirement Provision is made to comply with Creating a reserve is a matter of
accrual concept, prudence concept financial prudence.
and because of legal requirement.

Question 10. (Classification of Equity and Liabilities). State the major heads under Equity and Liabilities part of
the company's Balance Sheet.
Question 11. (Classification of 'Shareholders' Funds'). Name the sub-heads under the head 'Shareholders'
Funds'.
Question 12. (Classification of 'Non-current Liabilities'). Name the sub-heads under the head 'Non-current
Liabilities' in the Equity and Liabilities part of the Balance Sheet under Schedule III of the Companies Act, 2013
Question 13. (Classification of 'Current Liabilities'). Name the sub-heads under the head 'Current Liabilities' in
the Equity and Liabilities part of the Balance Sheet.
Question 14. (Reserves and Surplus). Name any five items that are shown under Reserves and Surplus.
Question 15. (Long-term Borrowings). Name any four items that are shown under Long-term Borrowings.
Question 16. (Other Current Liabilities). Name any five items that are shown under ‘Other Current Liabilities’.
Question 17. Under which heads are the following items shown in the Balance Sheet of a company as per
Schedule III?
(i) Forfeited Shares Account, (ii) Proposed Dividend,
(iii) Unclaimed Dividend, and (iv) Arrears of Fixed Cumulative Dividend.
Solution:
(i) Forfeited Shares Account is added to the 'Subscribed Share Capital' under the sub-head Share Capital
of the major head Shareholders' Funds in the Equity and Liabilities part of the balance sheet.
(ii) Proposed Dividend is shown as Short-term Provisions under the head Current Liabilities in the Equity
and Liabilities part of the Balance Sheet.
(iii) Unclaimed Dividend is shown as Other Current Liability under the head Current Liabilities in the Equity
and Liabilities part of the Balance Sheet.
(iv) Arrears of Fixed Cumulative Dividend is shown as Contingent Liability in the Note to Accounts.
Question 18. Under which main head and sub-head of Equity and Liabilities are the following items
shown in a company's Balance Sheet as per Schedule III?
(i) Debentures (ii) Public Deposits
(iii) Securities Premium Account (vi) Interest Accrued Reserve
(v) Forfeited Shares and due on Debentures
(iv) Capital Reserve
(vii) Bills Payable (viii) Advances Received from Customers
(ix) Sundry Creditors
Solution:
S. No. Main Head Sub-Head

(i) Debentures Non-current Liabilities Long- terms Borrowings
(ii) Public Deposits Non-current Liabilities Long- terms Borrowings
(iii) Securities Premium Reserve Shareholder funds Reserve and surplus
(iv) Capital Reserve Shareholder funds Reserve and surplus
(v) Forfeited Shares Account Shareholder funds Subscribe Capital (shown by way
of addition)

(vi) Interest Accrued and due on Current Liabilities Other Current Liabilities
Debentures
(vii) Bills Payable Current Liabilities Trade payables
(viii) Advances Received from Current Liabilities Other Current Liabilities
customers
(ix) Sundry Creditors Current Liabilities Trade payables
Question 19. Under which main heads and sub-heads of Equity and Liabilities are the following items
shown in the Balance Sheet of a company as per Schedule III?
(i) Unclaimed Dividend, (ii) Calls-in-Arrears,
(iii) Calls-in-Advance, (iv) Interest Accrued but not due on Debentures, and
(v) Arrears of Fixed Cumulative Preference Dividends.
Solution:
S. No. Items Main Head Sub-head

1. Unclaimed Dividend Current Liabilities Other Current
Liabilities
2. Calls-in-Arrears Shareholders' Funds Subscribed Capital
(shown by way of
deduction)
3. Calls-in-Advance, Current Liabilities Other Current
Liabilities
4. Interest Accrued but not due on Current Liabilities Other Current
Debentures, and Liabilities
5. Arrears of Fixed Cumulative Preference As a footnote as …
Dividends. Contingent Liability
Question 20. Under which main heads and sub-heads of Equity and Liabilities part of the Balance Slim as per
Schedule III of a company are the following items shown?
(i) Interest Accrued and due on Secured Loans,
(ii) Interest Accrued but not due on Unsecured Loans,
(iii) Debentures Redemption Reserve,
(iv) Capital Redemption Reserve,
(v) Advances from Customers (long-term).
Solution:
S. No. Items Main head Sub head

1. Interest Accrued and due on Secured Current Liabilities Other current Liabilities
Loans
2. Interest Accrued but not due on Current Liabilities Other current Liabilities
Unsecured Loans
3. Debentures Redemption Reserve Shareholders' Funds Reserve and surplus
4. Capital Redemption Reserve Shareholders' Funds Reserve and surplus

5. Advances from Customers (Long-term) Non-current Liabilities Other long terms

liabilities.
Question 21. Give major heads 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, (ii) Provision for Tax,
(iii) Surplus, i.e., Balance in Statement of Profit and Loss (Dr.)
(iv) Surplus, i.e., Balance in Statement of Profit and Loss.(Cr)
Question 22. How are the following two items shown in a company's Balance Sheet as at 31st March, 2019 as
per the requirements of Schedule III?
General Reserve (since 31st March, 2018) 3,00,000; Surplus, i.e., Balance in Statement of Profit and Loss
(Debit) for 2018-19 Rs 2,00,000.
Solution:
BALANCE SHEET as at 31st March, 2019
Particulars Note no. ₹

EQUITY AND LIABILITIES
Shareholders' Funds
Reserves and Surplus 1 1,00,000
Particulars ₹
Reserves and surplus
General reserve (Opening) 3,00,000
Surplus i.e., Balance in statement of profit and loss ( Dr. Balance) 2,00,000
1,00,000
Question 23. Classify the following into non-current assets and current assets and give reasons for such
classification:
(i) A company has an operating cycle of 11 months and the expected period of realisation of trade receivables
is 10 months.
(ii) A company has an operating cycle of 11 months and the expected period of realisation of Tarde receivables
is 12 months.
(iii) A company has an operating cycle Of 11 months and the expected period of realisation of trade
receivables is 15 months.
(iv) A company has an operating cycle of 20 months and the expected period of realisation of trade receivables
is 15 months.
(v) A company has an operating cycle of 20 months and the expected period of realisation of trade receivables
is 24 months.
Solution:
(i) Trade Receivables will be Classified as Current Asset because the operating cycle is 11 months and expected
period of realisation is 10 month which is less than the period of operating cycle and also 12 months (third
condition).

(ii) Trade Receivables will be classified as Current Asset because the period of operating cycle is 11 months and
expected period of realisation is 12 months which although is more than the period of operating cycle, it fulfils
the third condition of 12 months.
(iii) Trade Receivables will be classified as Non-current Asset because the period of operating cycle is 11
months and expected period of realisation is 15 months which is more than the period of operating cycle and
also exceeds the period under third condition, i.e., 12 months.
(iv) Trade Receivables will be classified as Current Asset because the period of operating cycle is 20 months
and expected period of realisation is 15 months which is less than the period of operating cycle although more
than the period of 12 months (third condition).
(v) Trade Receivables will be classified as Non-current Asset because the period of operating cycle is 20 months
and expected period of realisation is 24 months which is more than the period of operating cycle and also the
period of 12 months prescribed under third condition.
3. Contingent Liabilities and Commitments
(a) Contingent Liabilities are those liabilities which may or may not arise because they are dependent on a
happening in future. For example, a claim is filed against the company in a consumer court by a customer. The
court may hold the company at fault and may impose penalty. It may happen otherwise also. Whether the
company has a liability or not is dependent on court order. Thus, it is contingent liability. Contingent liability is
not recorded in the books of account but is disclosed in the Notes to Accounts for the information of the users.
It is to be classified into:
(i) Claims against the company not acknowledged as debts;
(ii) Guarantees given against third party; and
(iii) bill discounted with bank.
(b) Commitments mean financial commitments due to activities agreed to by the company to be undertaken
by it in future. They are to be classified into:
(i) Estimated amounts of contracts remaining to be executed on Capital Account and not provided for;
(ii) Uncalled liability on shares and other investments partly paid; and
(iii) Other commitments (Nature to be specified). Example of other commitments: If the company has issued
say 10% Cumulative Preference Shares but could not pay the dividend because of losses. Unpaid dividend shall
he classified as Commitments'.
Question 24. (Classification of Assets). State the major heads under which the items appearing in the Assets
part of the company's Balance Sheet are classified.
Solution: The major heads on Assets part are:
(i) Non-current Assets, and
(ii) Current Assets.
Question 25. (Classification of 'Non-current Assets'). Name the sub-heads under the head 'Non-current Assets
in the Assets part of the Balance Sheet as per Schedule 111.
Solution:
(i) Fixed Assets, (ii) Non-current Investments,
(iii) Deferred Tax Asset (Net), (iv) Long-term Loans and Advances, and
(v) Other Non-current Assets.

Question 26. (Classification of 'Fixed Assets'). Name the sub-heads under the head 'Fixed Assets' in the Assets
part of the Balance Sheet as per Schedule III.
Solution:
(i) Tangible Assets, (ii) Intangible Assets,
(iii) Capital Work-in-Progress, and (iv) Intangible Assets under Development.
Question 27. (Classification of 'Current Assets'). Name the sub-heads under the head 'Current Assets' in the
Assets part of the Balance Sheet as per Schedule III.
Question 28. Name any five items of Tangible Assets.
Question 29. (Intangible Assets). Name any five items of Intangible Assets.
Solution:
(i) Goodwill, (ii) Brand/Trademark,
(iii) Computer Software, (iv) Mining Rights, and
(v) Licences and Franchise.
Question 30. (Non-current Investment). List five items which are included under the head Non-current
Investment'.
Solution:
(i) Investment in Property, (ii) Investment in Equity Instruments,
(iii) Investment in Preference Shares, (iv) Investment in Debentures or Bonds, and
(v) Investment in Mutual Funds.
Question 31. (Inventories). List five items that are included under Inventories.
Solution:
(i) Raw Materials, (ii) Work-in-Progress,
(iii) Finished Goods, (iv) Stock-in-Trade, and
(v) Loose Tools.
Question 32. List five items that are included under Current Investments.
Solution:
(i) Investment in Equity Instruments, (ii) Investment in Preference Shares,
(iii) Investment in Government or Trust Securities, (iv) Investment in Debentures or Bonds, and
(v) Investment in Mutual Funds.
Question 33. Rearrange the following items under assets according to Schedule III:
(1) Office Equipment, (ii) Trademarks,
(iii) land, (iv) Stores and Spare Parts
(v)Deposit with Electricity Supply Company. (vi)Loose tools
(vii) Goodwill (viii) Bills Receivable

(ix) Debtors (x)Building
(xi) Furniture (xii) Vehicles
(xiii) Advance to subsidiaries (xiv) Cash to bank
(xv) Cash in hand (xvi) Work in progress (Machinery)
(xvii) Stock – in – trade (xviii) Plant
(xix) Interest Accrued on Investment and
Solution;
(i) Fixed Assets (Tangible): Office Equipment, Land, Building, Furniture, Vehicles, Plant.
(ii) Fixed Assets (Intangible): Goodwill, Trademarks.
(iii) Capital Work-in-Progress: Work-in-Progress (Machinery).
(iv) Long-term Loans and Advances: Advance to Subsidiaries, Deposits with Electricity Supply Company.
(v) Inventories: Loose Tools, Stock-in-Trade, Stores and Spare Parts.
(vi) Trade Receivables: Bills Receivable, Debtors.
(vii) Cash and Cash Equivalents: Cash at Bank, Cash in Hand.
(viii) Other Current Assets: Interest Accrued at Investments.
Question 34.. Give the heads under which following items are shown in a company's Balance Sheet as per
Schedule III, Part I of the Companies Act, 2013:
(1) Mortgage Loan (ii) Patents (iii) Investments (iv)General Reserve (v) Bills Receivable (vi) 10% Debentures
Solution;
S.no. Items Main head Sub head (if any)

1 Mortgage Loan Non-current liabilities Long-term Borrowings
2 Patents Non-current Assets Fixed Assets—Intangible
3 Investments Non-current Assets Non-current Investments
4 General Reserve Shareholders' Funds Reserves and Surplus
5 Bills Receivable Current Assets Trade Receivables
6 10% Debentures Non-current Liabilities Long-term Borrowings
Question 35.. 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:
(1) Debentures, (ii) Loose Tools, (iii) Calls-in-Advance
Solution:
S. no. Items Main head Sub head

1 Debentures Non-current Liabilities Long-term Borrowings
2 Loose Tools Current Assets Inventories
3 Calls-in-Advance Current Liabilities Current Liabilities
Question 36.. Under what heads and sub-heads the following items will appear in the Balance Sheet of a
company as per Schedule Ill of the Companies Act, 2013:

(i) Premium on Redemption of Debentures;
(ii) Loose Tools;
(iii) Balances with Banks.
Solution:

1 Premium on Redemption of Non-current Liabilities Other Long-term
Debentures Liabilities
2 Loose Tools Current Assets Inventories
3 Balances with Banks Current Assets Cash and Cash
Equivalents
Question 37.. 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) outstanding Interest on Calls-in-Advance;
(iii) Stores and Spares.
Solution:

1 Tax Reserve Shareholders' Funds Reserves and Surplus
2 Interest on Calls-in-Advance Current Liabilities Other Current Liabilities

3 Stores and Spares Current Assets Inventories
Question 38. Under what heads and sub-heads the following items will appear in the Balance Sheet of a
(i) Mining Rights
; (ii) Encashment of Employees Earned Leave Payable on Retirement;
(iii) Vehicles.
Solution:

1 Mining Rights Non-current Assets Fixed Assets—Intangible
Assets
2 Encashment of Employees Earned Leave Non-current Liabilities Long-term Provisions
Payable on Retirement
3 Vehicles Non-current Assets Non-current Assets Fixed Assets—Tangible
Assets
Question 39.. Under which heads and sub-heads will the following items appear in the Balance Sheet of a
(i) Subsidy Reserve;
(ii) Mining Rights;

(iii) Provision for Doubtful Debts.
S. No. Items Main head Sub head

1 Subsidy Reserve; Shareholders funds Reserves and Surplus
2 Mining Rights Non- current assets Fixed Assets—Intangible
Assets
3 Provision for Doubtful Debts Current assets Deduction from trade
receivables
Question 40.. Under which major sub heading the following items will be placed in the balance sheet of a
company as per Schedule III part I of the company Act 2013.
(i) Accrued incomes
(ii) loose Tools
(iii) Provision for employees benefits
(iv) Unpaid Dividend
(v) Short-terms-Loans
(vi) Long-term Loans
Solution:
Particulars Major head Sub head

1 Accrued incomes Current Assets Other Current Assets
2 loose Tools Current Assets Inventories
3 Provision for employees Non-Current Liabilities Long-term Provisions
benefits
4 Unpaid Dividend Current Liabilities Other Current Assets
Short-terms-Loans Current Liabilities Short-term Borrowings
6 Long-term Loans Non-Current Liabilities Long-term Borrowings
Question 41. under which 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) Capital Reserve
(ii) loans repayable on Demand
(iii) Goodwill
(iv) Bonds
(v) Vehicles
(vi) Loose Tools
Solution;
Particulars Sub head

(1) Capital Reserve Reserves and Surplus
(2) Bonds Long-term Borrowings
(3) loans repayable on Demand Short-term Borrowings
(4) Vehicles Fixed Assets—Tangible
(5) Goodwill Fixed Assets—Intangible
(6) Loose Tools Inventories

Question 42.. Under which sub-headings will the following items be shown in the Balance sheet of a company
as per Schedule III of the Companies Act, 2013:
(i) Stores and Spares (iii) Short-term Borrowings (v) Long-term Investments
(ii) Trademarks (iv) Provision for Employees Benefit (vi) Accrued Incomes
Solution:
Sub-Headings:
(i) Inventories; (iii) Current Liabilities/Short-term Borrowings; (v) Non-Current Investments;
(ii) Fixed Assets—Intangible; (iv) Long-term Provisions; (vi) Other Current Assets.
Question 43.. State under which major headings the following items will be presented in the Balance Sheet of
a company asper Schedule III of Companies Act, 2013:
(1) Trademarks (ii) Capital Redemption Reserve (iii) Income received in advance
(iv) Stores and Spares (vi) Current Investments (v) Office Equipment
Solution:
Major Headings:
(i) Non-Current Assets; (iii) Current Liabilities; (v) Non-Current Assets;
(ii) Shareholders' Funds; (iv) Current Assets; (vi) Current Assets.
Question 44. Under what main heads and sub-heads of Assets part are the following items classified or shown
in the Balance Sheet of a company as per Schedule III:
(1) Bills Receivable, (ii) Sundry Debtors, (iii) Long-term Investments,
(iv) Shares in listed companies (v) Prepaid Insurance,
(vi) Deposit with Customs Authorities, and (vii) Building.
Solution:
S. no. Items Main head Sub head

1 Bills Receivable, Current Assets Trade Receivables
2 Sundry Debtors Current Assets Trade Receivables
3 Long-term Investments, Non-current Assets Non-current Investments
4 Shares in listed companies Non-current Assets Non-current Investments
5 Prepaid Insurance Current Assets Other Current Assets

6 Deposit with Customs Authorities, Non-current Assets Long-term Loans and
and Advances
7 Building. Non-current Assets Fixed Assets-Tangible
Assets
*Considering it to be deposited for long-term.
Question 45. Under which major headings the following items will be presented in the Balance Sheet of a
(i) Loans provided repayable on demand (ii) Copyrights (iii) Cheques

(iv) Stock of finished goods (v) 9% Debentures repayable after three years
(vi) Goodwill (vii) Loose tools (vi) General Reserve
Solution;
S. no. Items Major head

I Loans provided repayable on demand Current Asset
II Goodwill Non-current Assets
III Copyrights Non-current Assets
IV Loose tools Current Asset
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 46. Under 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?
(1) Net loss as shown by Statement of Profit and Loss (ii) Capital Redemption Reserve
(iii) Bonds (iv) Loans repayable on demand
(v) Unpaid dividend
i) Buildings (viii) Trademarks
(viii) Raw materials
Solution
S.no. Items Major head Sub head

1 Net loss as shown by Statement Shareholders' Funds Reserves and Surplus (As
of Profit and Loss negative amount)
2 Capital Redemption Reserve Shareholders' Funds Reserves and Surplus
3 Bonds Non-current Liabilities Long-term Borrowings
4 Loans repayable on demand Current Liabilities Short-term Borrowings
5 Unpaid dividend Current Liabilities Other Current Liabilities
6 Buildings Non-current Assets Fixed Assets—Tangible
7 Trademarks Non-current Assets Fixed Assets—Intangible
8 Raw materials Current Assets Inventories
Question 47.. Under which major headings and sub-headings the following items will be shown in the Balance
Sheet of a company as per Schedule III of the Companies Act, 2013?
(i) Bank Overdraft (ii) Cheques in Hand
(iii) Loose Tools (iv) Long-term Provisions
Solution;
S.no. Items Major head Sub head

1. Bank Overdraft Current liabilities Short-term Borrowings
2. Cheques in Hand Current assets Cash and cash equivalents
3. Loose Tools Current assets Inventories
4. Long-term Provisions Non- Current liabilities Long terms provision

Question 48.. Under which of major heading and sub heading the following items will be shown in the Balance
sheet of a company as per schedule III of the companies Act 2013?
(i) Long-term Loans (ii) Tarde marks (iii) Loose tools (iv) Drafts in Hand
Solution:
S. no. Items Major head Sub head

1. Long-term Loans Non-current liabilities Long terms borrowings
2. Loose Tools Current assets Inventories
3. Trademarks Non—current assets Fixed assets; Intangible
assets
4. Drafts in Hand Current assets Cash and cash equivalents
Question 49. Following balance have been extracted from books of Rama Ltd. on 31st March, 2019: Equity
Share Capital (1,00,000 Equity Shares of 10 each) ₹ 10,00,000; Securities Premium Reserve ₹2,00,000; 12%
Debentures₹ 4,00,000; Creditors ₹ 2,00,000; Proposed Dividend ₹ 50,000; Surplus, i.e., Balance in Statement of
Profit and Loss (Debit) 50,000; Land and Building 9,00,000; Government Bonds ₹ 5,00,000; Capital Work-in-
Progress (Building) ₹ 3,50,000 and Cash at Bank ₹ 50,000. Debentures were issued on 1st April, 2017
redeemable after 5 years, i.e., on 31st March, 2022. prepare Balance Sheet of the company as per Schedule III,
Part I of the Companies Act, 2013.
Solution:
Particulars Note no. Current year

I. EQUITY LIABILITIES
1. Shareholders' Funds
(a) Share Capital 1. 10,00,000
(b) Reserves and Surplus 2. 1,50,000
2. Non-Current Liabilities
Long-term Borrowings 3. 4,00,000
3. Current Liabilities
(a) Trade Payables 4. 2,00,000
(b) Short-term Provisions 5. 50,000
Total 18,00,000
II Assets
1. Non-current assets
(a) Fixed assets;
(i) Tangible assets 6. 9,00,000
(ii) Capital work-in-progress 7. 3,50,000
(b) Non-current investment 8. 5,00,000
2. Current assets
Cash and cash equivalents 9. 50,000
Total 18,00,000
Notes to Account
Particulars ₹
1. Share Capital
Authorised Capital.
Equity Shares of 10 each
issued Capital:
Equity Shares of 10 each
Subscribed Capital:

Subscribed and fully paid-up

1,00,000 Equity Shares of t 10 each 10,00,000
2. Reserves and Surplus
(a) Securities Premium Reserve 2,00,000
(b) Surplus, i.e., Balance in Statement of Profit and Loss 50,000
1,50,000
3. Long-term Borrowings
12% Debentures 4,00,000
4. Trade Payables
Creditors 2,00,000
5. Short-term Provision
Proposed Dividend 50,000
6. Fixed Assets—Tangible Assets
Land and Building . 9,00,000
7.Fixed Assets—Capital Work-in-Progress
Building under Construction 3,50,000
8.Non-Current Investments
Government Bonds 5,00,000
9.Cash and Cash Equivalents
Cash at Bank 50,000
Question 50. (a) Beti Sports Ltd. is a manufacturer of cricket equipment. It sold waste from wood used for
manufacturing cricket bats for 1,00,000. Is the sale of waste Revenue from Operations? Give reasons.
(b) Beta Finance Ltd., a financial company, had invested its surplus funds of 10,00,000 in 10% Deposit with Tata
Housing Ltd. Is the interest received on the deposit Revenue from Operations or Other Income? Give reasons.
Question 51. Under which head following revenue items of a non-financial company will be shown?
(i) Sales;
(ii) Sale of Scrap;
(iii) Interest Earned; and
(iv) Dividend.
Solution:
Revenue from Operations: Sales and Sale of Scrap.
Other Income: Interest Earned and Dividend.
Question 52.. Under which head following revenue items of a financial company will be shown?
(i) Interest Earned;
(ii) Dividend;
(iii) Profit on Sale of Asset; and
(iv) Refund of Income Tax.
Solution:
Revenue from Operations: Interest Earned and Dividend.
Other Income: Profit on Sale of Asset and Refund of Income Tax.
Question 53. Calculate Revenue from Operations, Other Income and Total Revenue for a non-financial
company from the following information: Sales 12,00,000; Sales Return Rs 2,00,000; Sale of Scrap 25,000;
Interest on Fixed Deposits 30,000; Dividend Earned 10,000.

Solution:
Particular ₹ ₹
I. Revenue from Operations
Sales 12,00,000
Less: Sales Return 2,00,000 10,00,000
Sale of Scrap 25,000
10,25,000
II. Other Income 30,000
Interest on Fixed Deposits 10,000
Dividend 40,000
Total Revenue (I + II) 10,65,000
Question 54. Calculate Revenue from Operations, Other Income and Total Revenue for a financial company
from the following information:
Miscellaneous Income 5,000; Interest on Loans 8,00,000; Dividend 1,00,000; Gain (Profit) on Sale of Building
15,00,000.
Solution:
Particulars ₹ ₹
I. Revenue from Operations
Interest on Loans 8,00,000
Dividend 1,00,000 9,00,000
II. Other Income
Gain (Profit) on Sale of Building 15,00,000 5,000
Miscellaneous Income 15,05,000
Total Revenue (I + II) 24,05,000
Question 55.(a) Hind Electricals Ltd., manufacturer of lamps, has surplus funds of 5,00,000, which it has
invested in fixed deposit with a bank. The deposit earned an interest of 30,000. How will it be shown in the
Statement of Profit and Loss?
(b) Business Ltd. sold its car at a gain (profit) of 10,000. How will it be shown in the Statement of Profit and
Loss?
Question 56. Compute Cost of Materials Consumed from the following: Opening Inventory of Materials ₹
2,50,000; Materials Purchased ₹ 20,00,000; and Closing Inventory of Materials ₹ 3,00,000.
Solution:
Cost of Materials Consumed = Opening inventory + Purchases - Closing Inventory = ₹ 2 50 000 + 1 200000
3,00,000 01 19,50,000
Question 57. Compute Cost Of Materials Consumed from the following:
Opening Inventory : Materials 5,50,000
: Finished Goods 2,50,000
Materials Purchased 22,50,000

Closing Inventory
: Materials 4,50,000
: Finished Goods 1,50,000
Solution:
Cost of Materials Consumed = Opening Inventory of Materials + Purchases of Materials - Closing Inventory of
Materials = ₹ 5,50,000 + ₹ 22,50,000 - ₹ 4,50,000 = ₹ 23,50,000
Note: Opening Inventory of Finished Goods, i.e., ₹ 2,50,000 and Closing Inventory of Finished Goods, i.e.,₹
1,50,000 will not be considered to compute Cost of Materials Consumed as these are shown under Change in
Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade.
Question 58.. Compute Cost of Materials Consumed from the following: Opening Inventory of Materials
1,50,000; Opening Work-in-Progress 2,00,000; Materials Purchased 15,00,000; Closing Inventory of Materials
2,50,000 and Closing Inventory of Work-in-Progress 1,50,000.
Solution:
Cost of Materials Consumed = Opening Inventory of Materials + Purchases of Materials - Closing Inventory of
Materials = ₹ 1,50,000 + ₹ 15,00,000 - ₹ 2,50,000 = ₹ 14,00,000
Note: Opening Inventory of Work-in-Progress, i.e., ₹ 2,00,000 and Closing Inventory of Work-in-Progress, i.e., t
1,50,000 will not be considered to compute Cost of Materials Consumed as these are shown under Change in
Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade.
Question 59.. Compute Cost of Materials Consumed from the following: Opening Inventory of Materials ₹
7,50,000; Opening Inventory of Stock-in-Trade ₹ 2,00,000; Materials Purchased ₹ 25,00,000; Purchases of
Stock-in-Trade ₹ 15,00,000; Closing Inventory of Materials ₹ 2,50,000 and Closing Inventory of Stock-in-Trade ₹
1,50,000.
Solution: Cost of Materials Consumed = Opening Inventory of Materials + Purchases of Materials Closing
Inventory of Materials =₹ 7,50,000 + ₹ 25,00,000 - ₹ 2,50,000 = ₹ 30,00,000
Question 60. Prepare Note to Accounts for Change in Inventories of Bakers Ltd. for the year ended 31st March,
2019 from the following information and determine the amount that will be shown in the Statement of Profit
and Loss against Change in Inventories of Finished Goods, WlP and Stock-in-Trade.
Particulars Opening Inventory Closing Inventory

(₹) (₹)
Finished Goods 2,00,000 2,00,000
Work-in-Progress 4,50,000 5,00,000
Stock-in-Trade 7,50,000 7,00,000
Solution:
Note to Account
Particulars (₹) Year ended 31st

march 2016
Change in Inventories of Finished Goods, WIP and Stock-in-Trade
(a) Finished Goods
Opening Inventory
Less: Closing Inventory 2,50,000
Sub-Total 2,00,000
Work-in-Progress 50,000
Opening Inventory


Sub-Total 5,00,000
(C) Stock-in-Trade 50,000
Opening Inventory
Sub total 7,00,000
Total (a + b + c) 50,000
50,000
Question 61. Out of the following, identify the items that are shown in the Note to Accounts on Employees
Benefit Expenses:
(i) Wages;
(ii) Salaries;
(iii) Entertainment Expenses;
(iv) Bonus;
(v) Gratuity Paid and
(vi) Conveyance Expenses.
Solution:
Items to be shown in Note on Employees Benefit Expenses are:
(1) Wages; (ii) Salaries; (iii) Entertainment Expenses;
(iv) Bonus and (v) Gratuity Paid.
Question 62.. From the following information for the year ended 31st March, 2019, prepare Note to Accounts
on Employees Benefit Expenses:
(1) Wages 2,40,000; (ii) Salaries 3,60,000; (iii) Entertainment Expenses 15,000; (iv) Bonus 50,000; (v) Gratuity
Paid 1,20,000; (vi) Conveyance Expenses 25,000 and (vii) Medical Expenses 40,000. Solution:
Note to Accounts
Particulars Year ended 31st march 2016

Employees Benefit Expenses
Wages 2,40,000
Salaries 3,60,000
Bonus 50,000
Gratuity Paid 1,20,000
Medical Expenses 40,000
Amount to be shown in the Statement of Profit and Loss 8,10,000
Question 63. Out of the following, identify the items that are shown in the Notes to Accounts on Finance
Costs:
(1) Interest paid on Term Loan; (ii) Interest paid on Bank Overdraft; (iii) Discount on Issue of Debentures
Written off; (iv) Interest Received on Fixed Deposits and (v) Bank Charges.
Solution:
Items that will be shown in the Notes to Accounts on Finance Costs are: (i) Interest Paid on Term Loan; (ii)
Interest Paid on Bank Overdraft and (iii) Discount on Issue of Debentures Written off.

Question 64.. From the following information of Abbu Ltd. for the year ended 31st March, 2019, prepare Note
to Accounts on Finance Costs:
(i) Interest paid on Term Loan ₹ 2,50,000; (ii) Interest paid on Bank Overdraft ₹ 35,000; (iii) Discount on Issue
of Debentures Written off ₹ 10,000; (iv) Interest Received on Fixed Deposits ₹ 25,000; (v) Bank Charges 9,500
and (vi) Interest paid on Deposits ₹ 75,000.
Solution:
Note to Accounts
Particulars Year Ended 31st

March, 2016
Finance Costs
Interest paid on Term Loan 2,50,000
Interest paid on Bank Overdraft 35,000
Interest paid on Deposits 75,000
Discount on Issue of Debentures Written off 10,000
Amount to be shown in the Statement of Profit and Loss 3,70,000
Question 65. Identify which of the following items will be shown in the Note to Accounts on Other Expenses:
(1) Wages; (ii) Courier Expenses; (iii) Internet Expenses; (iv) Rent for factory; (v) Carriage Outwards; (vi)
Depreciation on furniture; (vii) Rent for warehouse; (viii) Rent for office (ix) Audit fee and (x) Staff Welfare
Expenses.
Solution: Items that will be shown in the Note to Accounts on Other Expenses are: (ii) Courier Expenses; (iii)
Internet Expenses; (iv) Rent for factory; (v) Carriage Outwards (vii) Rent for warehouse; (viii) Rent for office and
(ix) Audit fee.
Question 66.. Following is the Trial Balance of Jasmine Company Ltd. as at 31st March, 2019:
Particulars
Machinery 1,60,000
Land and Building 6,74,000
Depreciation on Machinery 16,000
Purchases of Raw Materials (Adjusted) 4,00,000
Closing Stock 1,50,000
Wages 1,20,000
Sales 10,00,000
Salaries 80,000
Bank Overdraft 2,00,000
10% Debentures (Issued on 1st April, 2015) 1,00,000
Equity Share Capital - Shares of Rs 100 each (Fully paid) 2,00,000
Preference Share Capital - 1,000; 6% Shares of 100 each 1,00,000
(Fully paid)
16,00,000 16,00,000
The Board of Directors of Jasmine Company Ltd. had decided to make the following appropriations: (i) To
declare an equity dividend @ 10% on paid-up capital.
(ii) To pay dividend on the Preference Share Capital in full.
(iii) To transfer 2,00,000 to General Reserve.
You are required to prepare Statement of Profit and Loss in as much detail as possible for the year ended 31st
March, 2019 and the Balance Sheet of the company as at that date as per Schedule III of the Companies Act,
2013.
Note: Ignore the Income Tax.

Solution:
Particulars Note no. ₹

I. Income
Revenue from Operations (Sales) 10,00,000
Total 10,00,000
II. Expenses 4,00,000
Cost of Materials Consumed (Adjusted Purchases) 2,00,000
Employees Benefit Expenses 10,000
Finance Cost Depreciation and Amortisation 16,000
Total 6,26,000
Profit before Tax (I - II) 3,74,000
Jasmine Company Ltd. Balance sheet as at 31st March, 2019
Particulars Note ₹
no.
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 3,00,000
(b) Reserves and Surplus 3,48,000
2. Non-Current Liabilities
Long-term Borrowings 1,00,000
3. Current Liabilities
Short-term Borrowings 2,00,000
Other Current Liabilities 10,000 26,000
Short-term Provisions 9,84,000
Total
II. ASSETS
1. Non-Current Assets 8,34,000
Fixed Assets:
Tangible Assets
2. Current Assets 1,50,000
Inventories 9,84,000
Total
Particulars ₹
1. Employees Benefit Expenses
Wages Salaries 1,20,000
2. Share Capital 80 000
Authorised Capital: 2,00,000
...Equity Shares of 100 each
...Preference Shares of 100 each
Issued Capital:
... Equity Shares of 100 each
...; 6% Preference Shares of 100 each
Subscribed Capital:
Subscribed and fully paid-up
2,000; Equity Shares of 100 each 2,00,000
1,000; 6% Preference Shares of 100 each 1,00,000
3,00,000
3. Reserves and Surplus
General Reserve:
Opening Balance
Add: Transfer from Surplus, i.e., Balance in Statement of Profit and Loss

2,00,000
Surplus, i.e., Balance in Statement of Profit and Loss: 2,00,000
Profit for the year
Less: Appropriations: 3,74,000
General Reserve 2,00,000
Proposed Dividend:
Equity 20,000
Preference 6,000 2,26,000
Total 1,48,000
4, long-term Borrowings 3,48,000
10% Debentures
5. Short term Borrowings 1,00,000
Bank 0verdraft
6. Other Current Liabilities 2,00,000
Interest on Debentures
7. Short-term Provisions 10 000
Proposed Dividend— Equity
- Preference 20,000
6,000
8. Tangible Assets 26,000
Machine
Land and Budding 1,60,000
6,74,000
8,34,000
QUESTION 67. Prepare the Balance Sheet of Payal Textiles Ltd. as required under Schedule III of the Companies
Act, 2013, as on 31 March 2019. Following balances are given:
Accounts Dr. Cr.
Rs. Rs.
Secured Term Loans — 10,00,000
Creditors — 11,45,000
6% Debentures Account — 27,00,000
Provision for Tax — 1,70,000
Security Premium Account — 4,75,000
General Reserves — 20,50,000
Loans from Debtors — 2,00,000
Provision for (Doubtful) Debts — 20,200
Provision for Depreciation — 5,00,000
Equity Share Capital (30,000 x 10) — 3,00,000
8% Preference Share Capital (10,000 x 100) — 10,00,000
Advances given to employee(Long term) 3,72,000 —
0
Advances to staff(short term) 55,000 —
Cash and Bank 2,75,000 —
Loose Tools 50,000 —
Investments 2,25,000 —
Profit and Loss Account (Losses) 3,00,000 —
Debtors 12,25,000 —
Discount on debentures( 10,000 to be written off within a year) 58,000 —
Stores Items 4,00,000 —
Tangible Fixed Assets 56,50,000 —
Capital Work-in-Progress 2,00,000 —
Finished Goods Stock 7,50,200 —
95,60,200 95,60,200

QUESTION 68. From the following particulars furnished by Sultan ltd., prepare the Balance Sheet as at 31
March, 2019 as required by Part I, Schedule III of the Companies Act. Give notes at the foot of the Balance Sheet
as may be found necessary:
Debit Credit
Equity Capital (Face value of Rs. 100) 10,00,000
Calls in Arrear 1,000 —
Land 2,00,000 .—
Building 3,50,000 —
Plant and Machinery 5,25,000 —
Furniture 50,000 —
General Reserve — 2,10,000
Loan from State Financial Corporation — 1,50,000
Stock:
Finished Goods 2,00,000
Raw Materials 50,000 2,50,000 —
68,000
Provision for Taxation ---
Sundry Debtors 2,00,000 —

Advances for purchase of machine 42,700 —
Proposed dividend — 60,000
Profit and Loss Account(surplus) — 1,00,000
Cash Balance 30,000 —
Cash at Bank 2,47,000 —
Franchise fees and software 13,300 —
Loans (Unsecured) — 1,21,000
Sundry Creditors (For Goods) — 2,00,000
19,09,000 19,09,000
Question 69. From the following particulars furnished by Bukhari Ltd., show the headings and sub-headings of
following items in balance sheet.
Particulars Head Sub-head

Equity share capital of Rs 10 each, 8 called up
(2,00,000 shares)
Calls in arrears
Share forfeited account
Calls in advance
General reserve
Security premium reserve
Provision for tax
Income tax payable
Tax reserve
Advance tax
Revaluation reserve
Debenture redemption reserve
Debentures
Bonds
Long term loan from bank
Public deposits
Short term loan
Bank overdraft
Cash credits
Current maturities of long term loans

Interest accrued but not due on borrowings

Proposed dividend
Unpaid/unclaimed dividend
Bills payable
Creditors
Advances from customers( short term)
Interest accrued and due on debentures
Surplus(credit)
Premium payable on redemption of debentures
Employees stock option outstanding(ESOP)
Non- current assets
Current assets
Question 70. From the following particulars furnished by Ram khilawan Ltd., 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?
Particulars Main head Sub-head

Equity share capital
Preference share capital
Share application money received to be refunded
Surplus( debit)
Debentures (to be refunded within one year)
Revaluation reserve
Subsidy reserve
Deferred tax liability(net)
Provision for expenses
Provident fund
Provident fund payable
Gratuity fund
Loan repayable on demand
Advance income
Outstanding expenses
Money received against share warrant
Advance from customers( long term)
Outstanding interest on calls in advance
Provision for employees benefits
Tangible fixed assets
Intangible assets
Capital work in progress
Intangible assets under development
Non-current investments
Deferred tax assets(net)
Long term loans and advances given
Other non-current assets
Current investments
Inventories
Trade receivables
Cash and cash equivalents
Short term loans and advances
Other current assets

Question 71. From the following particulars furnished by COC Ltd., 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?
Particulars head Sub head
Share capital
Money received against share warrant
Share application pending allotments
Non-current liabilities
Current liabilities
Land
Building
Machinery
Provision for depreciation on machinery
Vehicles
Goodwill
Patents
Copyright
Capital work in progress
Investment in property
Stock of raw materials
Stock of stock in trade
Stock of finished goods
Loose tools
Stores and Spare parts
Stock of work in progress
Advances to subsidiaries
Deposits with electric supply company
Bills receivables
Debtors
Provision for doubtful debts
Work in progress( machinery)
Cash in hand
Cash at bank
Cheques in hand
10% Fixed deposits( for 5 years)
Mining rights
Accrued incomes
Shares in listed companies
Prepaid insurance
Question 72. From the following particulars furnished by COC Ltd., state 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?

Investment in shares(short term)

Deferred tax assets(net)
Capital advances( e.g. advances for building)
Long term loan to employees
Short term loan to suppliers
Earmarked balances with bank
Prepaid expenses
Advance tax
Tax deducted at source
Dividend receivable on investment
Computer software
Vehicles
Drafts in hand
Cash in transit
Live stock
Debenture redemption reserve
Debenture redemption investment
10% Debentures
Outstanding interest on debentures
Computers
Cash and bank
Office equipment
Fixtures and furniture
Accumulated depreciation
Accrued income
Discount on issue of debentures
Share capital
Secured loan
Unsecured loan
Loan from directors
Public deposits
Current liabilities
Investment in partnership firm
Licenses and franchise
Brand/trade mark

Question 73. From the following information of COC ltd, prepare statement of profit and loss and balance
sheet as on 31st march 2019.
Particulars Dr Cr
Sales 10,00,000
Sale of scrap( by-product) 8,000
Interest received on investment 4,000
Dividend received on investment 7,000
Profit on sale of assets 3,000
Loss on sale of investment 4,000
Opening stock of raw material 12,000
Opening stock of work in progress 8,000
Opening stock of finished goods 7,000
Purchase of raw materials 4,00,000
Carriage inward 12,000
Freight outward 8,000
Salary 40,000
Wages 25,000
Bonus 35,000
Refund of income tax 7,000
Interest on debentures 40,000
Interest on loan 30,000
Bank charges 6,000
Discount on debentures written off 10,000
Conveyance expense 3,500
Medical expense 4,500
Share capital 3,00,000
General reserve 2,00,000
Non-current liabilities 4,00,000
Current liabilities 1,00,000
Non-current assets 9,64,000
Other Current assets 4,20,000
20,29,000 20,29,000
1. closing stock of raw material Rs 40,000
Work in progress Rs 6,000
Finished goods Rs 2,000

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12th class financial statements of a company CA/CMA Santosh kumar

FINANCIAL STATEMENTS OF A COMPANY

CHARACTERISTICS AND NATURE OF FINANCIAL STATEMENTS

Characteristics of Balance Sheet:

1. It shows the financial position of a company at a specific point of time.

Characteristics of Statement of Profit and Loss

2. The transactions are expressed in terms of money.

3. It is prepared for a past period and thus, is a historical document.

4. It is for a specific accounting period.

Nature of Financial Statements

The information in the Financial Statements is the result of a combination of:

CONCEPTONLINECLASSES.COM 1 MOB. 9999631597, 9811455109, 9999358518, 8448322142

OBJECTIVES OF FINANCIAL STATEMENTS : The Objectives of Financial Statements are:

1. To provide financial data on economic resources and obligations of an enterprise.

2. To show implications of operating profit on the financial position of an enterprise.

5. To serve as the basis of future operations.

ESSENTIALS OF FINANCIAL STATEMENTS

PARTIES INTERESTED IN FINANCIAL STATEMENTS OR USERS OF FINANCIAL STATEMENTS

Users of Financial Statements may be categorised into

(1) Internal Users and (2) External Users.

CONCEPTONLINECLASSES.COM 2 MOB. 9999631597, 9811455109, 9999358518, 8448322142

LIMITATIONS OF FINANCIAL STATEMENTS

A set of annual report of a company has:

CONCEPTONLINECLASSES.COM 3 MOB. 9999631597, 9811455109, 9999358518, 8448322142

1. A Report by the Board of Directors.

2. Auditors' Report to the Shareholders.

(i) Balance sheet as at the end of the financial year;

(iii) Cash flow statement.

(i) Accounting Policies followed by the company;

Let’s start detail discussion on Format of FINANCIAL STATEMENTS:

FORMAT OF BALANCE SHEET:

Particulars Note Figures as at the Figures as at the

(2) Share application money pending allotment 4 ------ -------

(4) Current liabilities

CONCEPTONLINECLASSES.COM 4 MOB. 9999631597, 9811455109, 9999358518, 8448322142

(c) Deferred tax assets (net) 18 ------- -------

MEANING OF KEY TERMS USED IN BALANCE SHEET

(b) Reserves and Surplus:

CONCEPTONLINECLASSES.COM 5 MOB. 9999631597, 9811455109, 9999358518, 8448322142

4. Current Liabilities: current liabilities are those liabilities which are:

(a) expected to be settled in company's normal Operating Cycle; or

(c) held primarily for the purpose of being traded; or

(iii) Capital Work-in-Progress: Capital Work-in-Progress means expenditure incurred on construction or

CONCEPTONLINECLASSES.COM 6 MOB. 9999631597, 9811455109, 9999358518, 8448322142

CONCEPTONLINECLASSES.COM 7 MOB. 9999631597, 9811455109, 9999358518, 8448322142

FORMAT OF STATEMENT OF PROFIT AND LOSS.

Particulars Note Figures for Figures for

DISCUSSION OF IMPORTANT TERMS USED:

CONCEPTONLINECLASSES.COM 8 MOB. 9999631597, 9811455109, 9999358518, 8448322142

Solution: Note to Accounts

CONCEPTONLINECLASSES.COM 9 MOB. 9999631597, 9811455109, 9999358518, 8448322142

Particulars Operating Cycle Expected

Difference between Current Maturities of Long-term Debts and Short-term Borrowings.

CONCEPTONLINECLASSES.COM 10 MOB. 9999631597, 9811455109, 9999358518, 8448322142

Difference between Provision and Reserve

Basis Provision Reserve

6. Investment Outside Amount of provision cannot be Reserve can be invested outside

CONCEPTONLINECLASSES.COM 11 MOB. 9999631597, 9811455109, 9999358518, 8448322142

(i) Forfeited Shares Account, (ii) Proposed Dividend,

(iii) Unclaimed Dividend, and (iv) Arrears of Fixed Cumulative Dividend.

(i) Debentures (ii) Public Deposits

(iii) Securities Premium Account (vi) Interest Accrued Reserve

(v) Forfeited Shares and due on Debentures