Financial statement of a company (Question Bank)
Financial statement of a company
Analysis of Financial statements suffers from the limitation of window dressing which means….
- All of these
- hide some vital information
- show items at incorrect value
to portray better profitability
- may overvalue closing stock to
show higher profits
Comparative Financial
Statement is an example of
- Horizontal analysis
- Vertical Analysis
- External analysis
- Internal Analysis
It helps in
ascertaining change in the items of income statement and Position Statement of
different years in terms of figures and percentage.
- Comparative statements
- Common Size statements
- Trend Analysis
- Ratio Analysis
Financial analysis
becomes useless because it:
- measures the profitability
- measures the Solvency
- lacks Qualitative Analysis
- makes a comparative study
The information
available from the Analysis, serves which of the following sections
- All of these
- Potential Investors
- Economist and Researchers
- Stock Exchange
Analysis conducted by
the Investors and Creditors is known as:
- External Analysis
- Cross Sectional Analysis
- Time Series Analysis
- Horizontal Analysis
When single set of
statements of two firms is compared, it is known as …….
- Cross Sectional Analysis
- Intra firm analysis
- Time Analysis
- Managerial Analysis
Study of relationship
between various items is known
- Ratio Analysis
- Comparative statements
- Common Size statements
- Trend Analysis
Which of the following
is not a limitation of analysis of financial statements?
- Window Dressing
- Price level changes ignored
- Subjectivity
- Intra firm comparison possible
[2020]
Cross Section analysis
is:
- Vertical Analysis
- Horizontal Analysis
- Time Series Analysis
- External Analysis
Which of the following
is not a limitation of Financial Statements Analysis?
- It is affected by personal bias
- Inter-firm comparative study
possible
- Lack of qualitative analysis
- Ignores price level changes
[2020]
The analysis of a
financial statement by a shareholder is an example of:
- External Analysis
- Internal Analysis
- Vertical Analysis
- Horizontal Analysis
When analysis is made
on the basis of Published statements, reports and information it is known as…..
- External analysis
- Internal Analysis
- Horizontal analysis
- Vertical Analysis
Main objective of
analysis of financial statements is:
- To know the financial strength
- To make a comparative study
with other firms
- To know the efficiency of
management
- All of these
Why government is
interested in analysis financial statement
- To Compile National Income and
taxes and policy making.
- To know whether the business is
able to pay debt
- To know the earning capacity
- To know the liquidity of
business
The financial analysis
becomes significant because it:
- ignores price level changes
- measures the efficiency of
business
- lacks qualitative analysis
- is affected by personal bias
Following are the
limitations of financial analysis except
- To make comparative study
within the firm and with other firms
- Don't reflect changes in price
level.
- Affected by the personal
ability and bias of the Analyst
- Single years' Analysis of
financial statement have limited use.
Main limitation of
analysis of financial statements is:
- Affected by window dressing
- Difficulty in forecasting
- Do not reflect changes in the
price level
- All of these
Why would public be
interested in analyzing financial statement?
- to know information about the
continuance of an enterprise
- To know the earning capacity
- To know the liquidity of
business
- To know whether the business is
able to pay debt
________ is conducted
by the management.
- Internal Analysis
- External Analysis
- Auditors Report
- Both External Analysis and
Auditors Report
The Real object of
Analysis of Financial Statement is …………
- To measure the financial
strength of the business
- To know about historical cost
concept
- To assess the total liabilities
of the firm
- To assess the total expenses of
the firm
Various figure of
single year Financial Statement are converted into percentage with respect to
some common base. In Income Statement ____ is taken as base (i.e.100) where as
in Balance Sheet total _____are taken as base (i.e. 100).
- Revenue from operations, Assets
- Purchase, Liabilities
- Sales, Liabilities
- Purchase , Assets
If the different
financial data is analyzed and compared over a period of time it is called
- Intra firm analysis
- Inter firm analysis
- Both Intra firm analysis and
Inter firm analysis.
- Statement of P/L
Interpretation of
Financial Statements includes:
- Criticisms and Analysis
- Comparison and Trend Study
- Drawing Conclusion
- All of these
Feature of financial
analysis is to present the data contained in financial statements in:
- Easy form
- Convenient and rational groups
- Comparable form
- All of these
Who is interested in
the analysis of financial statement?
- All of these:
Creditors
Government
Investors
- Creditors
- Government
- Investors
Which of the following
is not a limitation of financial statement analysis?
- To assess the financial
position and profitability
- Historical analysis
- Ignores price level changes
- Qualitative aspect is ignored
Internal analysis is
done by
- Management
- Shareholders
- Bankers
- Creditors
Which of these are
limitation of Financial statements:
- Measuring of financial strength
- Measuring of earning capacity
or profitability
- Measuring of solvency
- Static statements
How a Company’s
balance sheet is different from the balance sheet of partnership firm?
- A company‘s Balance
Sheet format is fixed under schedule III .Whereas, there is no standard
form prescribed under the Indian partnership Act,1932 for a partnership
Firm’s balance sheet.
- For company‘s Balance Sheet and
partnership balance sheet format is fixed under schedule III.
- In case of a company‘s Balance
sheet previous year‘s figures are required to be given whereas it is not
so in the case of a partnership firm’s balance sheet.
- Not different
From the following
information for the year ended 31st March, 2018, prepare notes to accounts to
determine the amount to be shown in Statement of Profit and Loss against Change
in Inventory:
|
|
Opening
Inventory |
Closing
Inventory |
|
Finished Goods |
10,00,000 |
9,40,000 |
|
Work-in-Progress (Semi-Finished
Goods) |
5,00,000 |
6,00,000 |
|
Stock-in Trade |
8,00,000 |
7,30,000 |
|
Materials |
1,00,000 |
1,50,000 |
From the following
information of A Ltd. for the year ended 31st March, 2015 prepare Notes to
Accounts on Finance Costs:
|
|
₹ |
|
(i) Interest paid on Debentures |
1,80,000 |
|
(ii) Interest paid on Term Loan |
3,10,000 |
|
(iii) Loan Processing Charges |
60,000 |
|
(iv) Interest received on Term
Deposits |
75,000 |
|
(v) Discount on Issue of
Debentures written off |
20,000 |
|
(vi) Interest paid on Cash Credit |
2,50,000 |
On 1st April, 2018 X
Ltd. has a debit balance of ₹ 3,00,000 in Reserves and Surplus as Balance of
Statement of Profit & Loss. It earned a profit of ₹ 5,00,000 for the year
ended 31st March, 2019. How would you show these items in the Balance Sheet and
notes to accounts?
Show how the
followings items will appear in a Company’s Balance Sheet:
|
|
₹ |
|
Land and Building |
20,00,000 |
|
Goodwill |
3,00,000 |
|
Patents |
1,00,000 |
Under what headings
will you show the following items?
- Interest Accrued and due on
Unsecured Loan
- Interest Accrued and due on
Secured Loan
- Interest Accrued but not due on
Loan
- Mortgage Loan
- Government and Trust Securities
- Uncalled liability on partly
paid shares
- General Reserve
- Subsidy Reserve
[2013]
Under which heads the
following are shown in a company's Balance Sheet:
- Public Deposits
- Office Furniture
- Prepaid Rent
- Outstanding Salaries
- Computer Software
- Interest Accrued on Investment
How would you show the
following items in a Company’s Balance Sheet as at 31st March, 2017:
|
Particulars |
₹ |
|
Public Deposits |
4,00,000 |
|
Outstanding Expenses |
10,000 |
|
Calls in Advance |
25,000 |
|
Provision for Employee Benefits
(Maturing within 12 months) |
20,000 |
|
Provision for Taxation |
1,50,000 |
State giving reason
whether Trade Receivables are classified as Current Assets or Non-current
Assets in the Balance Sheet of a Company as per Schedule III of the Companies
Act, 2013 in the following cases:
|
Case |
Operating
Cycle Period (Months) |
Expected
Realisation Period (Months) |
|
1 |
10 |
11 |
|
2 |
10 |
12 |
|
3 |
10 |
13 |
|
4 |
14 |
13 |
|
5 |
15 |
16 |
How will you show the
following items in the Balance Sheet of a Company:
- Calls in Arrears
- Calls in Advance
- Forfeited Shares
- Debenture Sinking Fund
- Contingent Liability
State under which
major headings the following items will be presented in the balance sheet of a
company as per Schedule III Part I of the Companies Act, 2013.
- Long-term borrowings
- Trade payables
- Provision for tax
- Securities premium reserve
- Patents
- Accrued incomes
- Current investment
[2014]
Olympus Ltd. has an
opening debit balance of ₹ 5,00,000 in Reserves and Surplus as Balance of
Statement of Profit & Loss. It earned a profit of ₹ 8,00,000 for the year
ended 31st March, 2019. How would you show these items in the Balance Sheet and
notes to accounts?
Under which heads are
the following items shown in the Balance Sheet of a company as per Schedule
III?
- Forfeited Shares Account,
- Proposed Dividend,
- Unclaimed Dividend, and
- Arrears of Fixed Cumulative
Dividend.
Z Ltd. has the
following balances on 1st April, 2018:
|
|
₹ |
|
General Reserve |
2,50,000 |
|
Capital Reserve |
1,50,000 |
|
Statement of Profit & Loss |
2,00,000 |
During the year ended
31st March, 2019, it incurred a loss of ₹ 7,10,000. Show how these items will
appear in the Balance Sheet and notes to accounts?
Under which sub-heads
will the following items be placed in the Balance Sheet of a company as per
revised Schedule VI, Part I of the Companies Act, 1956 (Schedule III, Part I of
the Companies Act, 2013)?
- Capital Reserve
- Bonds
- Loans repayable on Demand
- Vehicles
- Goodwill
- Loose Tools
[2014]
Under which sub-head
will the following be classified or shown:
- Long-term Borrowing;
- Deferred Tax Liabilities (Net);
and
- Long-term Provisions?
Under which major
headings and sub-headings the following items will be presented in the Balance
Sheet of a company as per Schedule III Part I of the Companies Act, 2013?
- Loans provided repayable on
demand
- Goodwill
- Copyrights and Patents
- Cheques
- General Reserve
- Goods acquired for trading, and
- 9% Debentures repayable after
three years
Operating Cycle and
the expected period of realisation of trade receivables is given below. How
will you classify the asset?
|
Particulars |
(i) |
(ii) |
(iii) |
(iv) |
(v) |
(vi) |
(vii) |
|
Operating Cycle (Months) |
9 |
17 |
10 |
10 |
14 |
24 |
10 |
|
Expected period of realisation of
trade receivables (Months) |
8 |
15 |
11 |
15 |
16 |
20 |
12 |
How would you disclose
the following items in the Financial Statements of a Limited Company?
- Outstanding Salary
- Bank Balance
- Unpaid Matured Deposits
- Preliminary Expenses
- Bills Payable
- Sale of Services
- Goodwill written off
- Medical Exp.
Under what main
heads andand 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
- Debentures
- Loose tools
- Calls-in-advance
[2013]
Give the major
headings 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.
- Trade payables (Sundry
creditors)
- Provision for tax
- Preliminary expenses
- Loose tools
- Interest accrued on investments
- Goodwill
[2011]
Under what major 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
- Tax reserve
- Interest on calls-in-advance
- Stores and spares
[2013]
Under what main 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
- Mining rights
- Encashment of employees earned
leave payable on retirement
- Vehicles
[2013]
Calculate Cost of
Materials Consumed from the following: Opening Inventory of Materials ₹
5,00,000; Purchase of Materials ₹ 25,00,000; and Closing Inventory of Materials
₹ 4,00,000.
What are the major
heads in the Equity and Liabilities part of the Balance Sheet as per Schedule
III?
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?
- Long-term Loans
- Loose Tools
- Trademarks
- Drafts in Hand
[2015]
Under what headings
will you show the following items in the Financial Statements of a Company:
- Balances with Banks
- Investments
- Outstanding Salary
- Authorised Capital
- Acceptances (B/P)
- Trade Payables
- Preliminary Expenses
- Profit on Sale of Vehicle
- Sale of Scrap
- Leave Encashment Exp.
Under which main head
and sub-head of Equity and Liabilities side are the following items shown in a
Company’s Balance Sheet:
- Calls in Advance.
- Surplus i.e., Balance in
Statement of Profit and Loss.
- Surplus i.e., Balance in
Statement of Profit and Loss (Dr.).
- Advances received from
Customers.
- Interest Accrued and Due on
Debentures.
- Interest Accrued but not Due on
Debentures.
- Arrears of Fixed Cumulative
Preference Dividends.
- Provision for Employee
Benefits.
Under which heads the
following items are shown in the Balance Sheet of a company:
- Calls-in-Arrears
- Commission Received in Advance
- Debentures
- Stores and Spare Parts
- Land and Building
- Forfeited Shares Account
From the following
information of Best Marketing Ltd. for the year ended 31st March, 2019 prepare
Note to Accounts on Depreciation and Amortisation Expenses: Depreciation on:
Building ₹ 15,500; Plant and Machinery ₹ 25,000; Computers ₹ 60,000; Goodwill written
off ₹ 7,500; Patents written off ₹ 12,500.
Rearrange the
following items under assets according to Schedule III:
|
(i) Office Equipment, |
(ii) Loose Tools, |
(iii) Goodwill, |
|
(iv) Trademarks, |
(v) Bills Receivable, |
(vi) Debtors, |
|
(vii) Land, |
(viii) Building |
(ix) Stock-in-Trade, |
|
(x) Stores and Spare Parts, |
(xi) Furniture, |
(xii) Vehicles, |
|
(xiii) Advance to Subsidiaries, |
(xiv) Cash at Bank, |
|
|
(xv) Cash in Hand, |
(xvi) Work-in-Progress
(Machinery), |
|
|
(xvii) Plant, |
(xviii) Interest Accrued on Investments,
and |
|
|
(xix) Deposits with Electricity
Supply Company. |
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