Analysis Of Financial Statements Ts Grewal 2018 for Class 12 Commerce Accountancy Chapter 1

Question 1:

What are the major heads in the Equity and Liabilities part of the Balance Sheet as per Schedule III?

Answer:

The major heads in the Equities and Liabilities part of the Balance sheet are:

i. Shareholder’s Funds,

ii. Share Application Money Pending Allotment,

iii. Non- Current Liabilities and

iv. Current Liabilities

Balance Sheet as at_______
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital
b. Reserves and Surplus
c. Money Received against Share Warrants
2. Share Application Money Pending Allotment
3. Non-Current Liabilities
a. Long-term Borrowings
b. Deferred Tax Liabilities (Net)
c. Other Long-term Liabilities
d. Long Term Provisions
4. Current Liabilities
a. Short-term Borrowings
b. Trade Payables
c. Other Current Liabilities
d. Short-term Provisions
Total

Question 2:

Under which major head will the following be shown:

(i) Share Capital; and (ii) Money Received Against Share Warrants?

Answer:

Items	Major Head
Share Capital	Shareholder’s Funds
Money received against share warrants	Shareholder’s Funds

Question 3:

List any five items that are shown under Reserves and Surplus.

Answer:

Items shown under Reserves and Surplus are:

i. Capital Reserve,

ii. Capital Redemption Reserve,

iii. Securities Premium Reserve,

iv. Debenture Redemption Reserve,

v. Revaluation Reserve etc.

Question 4:

Under which sub-head will the following be classified or shown:
(i) Long-term Borrowings; (ii) Deferred Tax Liabilities (Net); and (iii) Long-term Provision?

Answer:

Items	Sub-head
Long-term Borrowings	Non-Current Liabilities
Deferred Tax Liabilities (Net)	Non-Current Liabilities
Long-Term Provisions	Non-Current Liabilities

Question 5:

Name the itmes that are shown under Long-term Borrowings.

Answer:

Items shown under Long-term Borrowings are:

a. Debentures,

b. Bonds,

c. Terms Loans (both from Banks and from others),

d. Public Deposits,

e. Other Loans and Advances.

Question 6:

A company has an opening credit balance in Surplus, i.e., Balance in Statement of Profit and Loss of ₹ 1,00,000. During the year, it earned a profit of ₹ 75,000. It decided to transfer ₹ 15,000 to Debentures Redemption Reserve (DRR) and also proposed to pay dividend of ₹ 25,000.

How will be the appropriations shown in the financial statements?

Answer:

Extract of Balance Sheet as at …..
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital
b. Reserves and Surplus	1	1,50,000
2. Share Application Money Pending Allotment
3. Non-Current Liabilities
4. Current Liabilities
a. Short-term Provisions	4	25,000
Total

NOTES TO ACCOUNTS

Note No.	Particulars			Amount (Rs)
1	Reserves and Surplus
	(a) Surplus, i.e. Balance in Statement of Profit and Loss	1,00,000
	Add: Profit for the year	75,000
	Less: Appropriations
	Transfer to Debenture Redemption Reserve		(15,000)
	Proposed Dividend		(25,000)	1,35,000
	(b) Debenture Redemption Reserve
	Transferred from Surplus i.e. Balance in Statement of Profit and Loss			15,000
	Total (a + b) [to be Shown in Balance Sheet against Reserves and Surplus]			1,50,000
4	Short-term Provisions
	Proposed Dividend			25,000

Question 7:

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

Answer:

Case	As Current Assets or Non- Current Assets	Reason
1.	Current Assets	Expected receipt is more than operating cycle but receivable within 12 months.
2.	Current Assets	Expected receipt is more than operating cycle but receivable within 12 months.
3.	Non- Current Assets	Expected receipt is more than operating cycle and receivable after 12 months.
4.	Current Assets	Expected receipt is less than operating cycle.
5.	Non- Current Assets	Expected receipt is more than operating cycle and receivable after 12 months.

Question 8:

State giving reason whether Trade Payables are classified as Current Liabilities or Non-current Liabilities in the Calance Sheet of a Company as per Schedule III of the Companies Act, 2013 in the following cases:


Case	Operating Cycle Period (Months)	Expected Payment Period (Months
1	10	11
2	10	12
3	10	13
4	14	13
5	15	16

Answer:

Case	As Current Liabilities or Non- Current Liabilities	Reason
1.	Current Liabilities	Expected payment is more than operating cycle but payable within 12 months
2.	Current Liabilities	Expected payment is more than operating cycle but payable within 12 months
3.	Non- Current Liabilities	Expected payment is more than operating cycle and payable after 12 months
4.	Current Liabilities	Expected payment is less than operating cycle
5.	Non- Current Liabilities	Expected payment is more than operating cycle and payable after 12 months

Question 9:

Under which head and how are the following items shown in the Balance Sheet of a company under Schedule III:

(i) Calls-in-Arrears; (ii) Share Application Money Pending Allotment; (iii) Unpaid Dividend; and (iv) Dividend not paid on Cumulative Preference Shares?

Answer:

Items	Head	Disclosure
Calls-in-Arrears	Shareholder’s Funds	It is shown as a deduction from Subscribed Capital shown as ‘Subscribed but not fully paid’ under Shareholder’s Funds
Share Application Money Pending Allotment	Share Application Money Pending Allotment	It is shown as a separate line item
Unpaid Dividend	Current Liabilities	It is shown as ‘Other Current Liability’ under Current Liabilities
Dividend not paid on Cumulative Preference Shares	Contingent Liabilities and Commitments	It is shown as Contingent Liabilities and Commitments in Notes to Accounts

Question 10:

Under which main head and sub-head of Equity and Liabilities part of the Balance Sheet are the following items classified or shown:

(i) Bonds;	(ii) Debentures
(iii) Public Deposits;	(iv) Capital Redemption Reserve;
(v) Forfeited Shares Account:	(vi) Sundry Creditors; and
(vii) Interest Accrued but Not Due on Debentures?

Answer:

Items	Main head	Sub-head
Bonds	Non-Current Liabilities	Long Term Borrowings
Debentures	Non-Current Liabilities	Long Term Borrowings
Deposits	Non-Current Liabilities	Long Term Borrowings
Capital redemption Reserve	Shareholder’s Funds	Reserves and Surplus
Share Forfeiture Account	Shareholder’s Funds	Subscribed Capital under Share Capital
Sundry Creditors	Current Liabilities	Trade Payables
Interest Accrued but not due on Debentures	Current Liabilities	Other Current Liabilities

Question 11:

State any two items that are included in the following major heads under which liabilities of a company are shown: (i) Reserves and Surplus; (ii) Long-term Borrowings; (iii) Short-term Borrowings; (iv) Other Current Liabilities.

Answer:

Major head	Items
Reserves and Surplus	Capital Reserve, Revaluation Reserve
Long-term Borrowings	Debentures, Term Loans from Bank and Others
Short-term Borrowings	Cash credit from bank, Loans repayable on demand
Other Current Liabilities	Income received in advance, Unpaid Dividends

Question 12:

Classify the following items under major head and sub-head (if any) in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013: (i) Capital Work-in-Progress: (ii) Provision for Warranties; (iii) Income received in Advance; and (iv) Capital Advances

Answer:

Item	Major Head	Sub-Head
Capital Work-in-Progress	Non-Current Assets	Fixed Assets- Capital Work-in-Progress
Provision for Warranties	Non-Current Liabilities	Long Term Provisions
Income Received in Advance	Current Liabilities	Other Current Liabilities
Capital Advances	Non-Current Assets	Long Term Loans & Advances

Question 13:

Under which major head and sub-head of the Assets part of the Balance Sheet will the following be shown:

(i) Intangible Assets; (ii) Intangible Assets under Development; (iii) Investments (more than 12 months); (iv) Deferred Tax Assets (Net); (v) Stores and Spares; and (vi) Loose Tools?

Answer:

Items	Main head	Sub-head
Intangible Assets	Non-Current Assets	Fixed Assets
Intangible Assets under development	Non-Current Assets	Fixed Assets
Investments (more than 12 months)	Non-Current Assets	Non-Current Investments
Deferred Tax Assets (Net)	Non-Current Assets	Deferred Tax Assets (Net)
Stores and Spares	Current Assets	Inventories
Loose Tools	Current Assets	Inventories

Question 14:

Under which heads the following items are classified or shown on the Assets part of the Balance Sheet of a copany: (i) Loose Tools; (ii) Bills Receivable; (iii) Sundry Debtors: and (iv) Advances Recoverable in Cash?

Answer:

Items	Main head	Sub-head
Loose Tools	Current Assets	Inventories
Bills Receivable	Current Assets	Trade Receivables
Sundry Debtors	Current Assets	Trade Receivables
Advance Recoverable in Cash	Current Assets	Short-term Loans and Advances

Question 15:

Under which heads the following items on the Assets part of the Balance Sheet of a company will be presented?

(i) Sundry Debtors;	(ii) Patents and Trademarks;	(iii) Shares in Quoted Companies:
(iv) Advances recoverable in cash;	(v) Prepaid Insurance; and	(vi) Work-in-Progress (Machinery)?

Answer:

Items	Main head	Sub-head
Sundry Debtors	Current Assets	Trade Receivables
Patents and Trade Marks	Non-Current Assets	Fixed Assets (Intangible Assets)
Shares in Quoted Companies	Non-Current Assets	Non-Current Investments
Advance Recoverable in Cash	Current Assets	Short-term Loans and Advances
Prepaid Insurance	Current Assets	Other Current Assets
Work-in-Progress (Machinery)	Non-Current Assets	Fixed Assets (Capital Work-in-progress)

Question 16:

Under which of the major heads will the following items be shown while preparing Balance Sheet of a company, as per Schedule III of the Companies Act, 2013:

(i) Unamortised Loss on Issue of Debentures (To be written off after 12 months from the date of Balance Sheet);
(ii) 10% Debentures;	(iii) Stock-in-Trade;	(iv) Cash at Bank;
(v) Bills Receivable;	(vi) Goodwill;	(vii) Loose Tools;
(viii) Truck;	(ix) Provision for Tax; and	(x) Sundry Creditors?

Answer:

ITEMS	HEAD	SUB-HEAD
Unamortised Loss on Issue of Debentures (To be written off after 12 months from date of Balance sheet)	Non-Current Assets	Other Non-Current Assets
10% Debentures	Non Current Liabilities	Long-term Borrowings
Stock-in-Trade	Current Assets	Inventories
Cash at Bank	Current Assets	Cash and Cash equivalents
Bills Receivable	Current Assets	Trade Receivables
Goodwill	Non-Current Assets	Fixed Assets (Intangible Assets)
Loose Tools	Current Assets	Inventories
Truck	Non-Current Assets	Fixed Assets (Tangible Assets)
Provision for Tax	Current Liabilities	Short term Provisions
Sundry Creditors	Current Liabilities	Trade Payables

Question 17:

Under which heads will the following items be shown in the Balance Sheet of a Company

(i) Bank Balance;	(ii) Investments (Long-term);	(iii) Outstanding Salary;
(iv) Authorised Capital;	(v) Bills Payable;
(vi) Unclaimed Dividents;	(vii) Shares Option Outstanding Account;
(viii) General Reserve; and	(ix) Subsidy Reserve?

Answer:

S. No.	Items	Main Head	Sub-Head
1	Bank Balance	Current Assets	Cash and Cash Equivalents
2	Investments (Long-term)	Non-Current Assets	Non-Current Investments
3	Outstanding Salary	Current Liabilities	Other Current Liabilities
4	Authorised Capital	Shareholder's Fund	Share Capital
5	Bills Payable	Current Liabilities	Trade Payables
6	Unclaimed Dividends	Current Liabilities	Other Current Liabilities
7	Share Option Outstanding Account	Shareholders’ Funds	Reserves and Surplus
8	General Reserve	Shareholders’ Funds	Reserves and Surplus
9	Subsidy Reserve	Shareholders’ Funds	Reserves and Surplus

Answer:

S. No.	Items	Main Head	Sub-Head
1	Calls-in-Arrears	Shareholder's Funds	Share Capital (i.e. as a deduction from subscribed share capital)
2	Commission Received in Advance	Current Liabilities	Other Current Liabilities
3	Debentures	Non-Current Liabilities	Long-term Borrowings
4	Stores and Spare Parts	Current Assets	Inventories
5	Land and Building	Non-Current Assets	Fixed Assets (Tangible Assets)
6	Forfeited Shares Account	Shareholder's Funds	Share Capital (i.e. as an addition to subscribed share capital)
7	Government Securities	Non-Current Assets	Non-Current Investments
8	Uncalled Liability on partly paid shares	Commitments in Notes to Accounts	Commitments in Notes to Accounts

Answer:

S. No.	Items	Main Head	Sub-Head
1	Public Deposits	Non-Current Liabilities	Long-term Borrowings
2	Office Furniture	Non-Current Assets	Fixed Assets (Tangible Assets)
3	Prepaid Rent	Current Assets	Other Current Assets
4	Outstanding Salaries	Current Liabilities	Other Current Liabilities
5	Computer Software	Non-Current Assets	Fixed Assets (Intangible Assets)
6	Interest Accrued on Investment	Current Assets	Other Current Assets
7	Bills Discounted but not Matured	It is shown as a Contingent Liability in the Notes to Accounts	It is shown as a Contingent Liability in the Notes to Accounts
8	Live Stock	Non-Current Assets	Fixed Assets (Tangible Assets)

Question 20:

Name the major heads under which the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013:

(i) Loose Tool.	(ii) Unpaid Dividend.
(iii) Copyrights and Patents.	(iv) Land and Building.

Answer:

Items	Main Head
Loose Tools	Current Assets
Unpaid Dividend	Current Liabilities
Copyrights & Patents	Non- Current Assets
Land & Building	Non- Current Assets

Question 21:

Identify the major heads under which the following items will be shown in the Balance Sheet of a company as per Schedule III of Companies Act, 2013:

(i) Provision for Tax.	(ii) Loan payable on demand.
(iii) Computer and related equipment.	(iv) Goods acquired for trading

Answer:

Items	Main Head
Provision for Tax	Current Liabilities
Loan payable on demand	Current Liabilities
Computer & related equipment	Non- Current Assets
Goods acquired for trading	Current Assets

Question 22:

How are the following items shown while preparing Balance Sheet of a company:
(i) Surplus, i.e., Balance in Statement of Profit and Loss (Dr.);
(ii) Interest accrued and due on Debentures;
(iii) Computer Software under development;
(iv) Interest accrued on Investment?

Answer:

ITEMS	MAJOR HEAD	SUB-HEAD
Surplus, i.e. Balance in Statement of Profit and Loss (Dr.)	Shareholder’s Funds	Reserves and Surplus (as negative figure)
Interest accrued and due on debentures	Current Liabilities	Other Current Liabilities
Computer Software under development	Non-current Assets	Fixed Assets (Intangible Assets under development)
Interest accrued on Investments	Current Assets	Other Current Assets

Answer:

Extract of Balance Sheet as at March 31, 2016
Particulars			Note No.	Amount (Rs)
2. Non-Current Liabilities
Long-term Borrowings
11% Loan from SBI		20,00,000
7,500, 10% Debentures of Rs 100 each		7,50,000		27,50,000
3. Current Liabilities
Other Current Liabilities
Current Maturity of Long-term Debts (2,500 Debentures of Rs 100 each maturing within 12 months)	2,50,000
Interest accrued and Due on Debentures	1,00,000
Interest accrued and Due on Loan	2,20,000			5,70,000

Total				33,20,000

Question 24:

Prepare Balance Sheet of the Company as per Schedule III of the Companies Act, 2013:	₹
10% Debentures of ₹ 100 each	1,90,000
Stock-in-Trade (inventories)	40,000
Goodwill	20,000
Provision for Tax	60,000
Totalling of Balance Sheet is not required

Answer:

Balance Sheet as at …
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds		–
2. Non-Current Liabilities
Long-term Borrowings	1	1,90,000
3. Current Liabilities
Short-term Provisions	2	6,000
Total

II Assets
1. Non-Current Assets
Intangible (Fixed Assets)	3	20,000
2. Current Assets
a. Inventories	4	40,000
Total

*NOTES TO ACCOUNTS*
Note No.	Particulars	Amount (Rs)
1	Long-term Borrowings
	10% Debentures	1,90,000

2	Short-term Provisions
	Provision for Tax	6,000

3	Intangible (Fixed Assets)
	Goodwill	20,000

4	Inventories
	Stock-in-Trade	40,000

Answer:

Balance Sheet as at March 31, 2016
Particulars	Note No.	Amount (Rs)
I Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	5,000
b. Reserves and Surplus	2	4,200
2. Non-Current Liabilities
Long-term Borrowings	3	3,000
3. Current Liabilities
Other Current Liabilities		2,500
Total		14,700

II Assets
1. Non-Current Assets
Fixed Assets (Tangible Assets)	4	8,300
2. Current Assets
Other Current Assets		6,400
Total		14,700

*NOTES TO ACCOUNTS*
Note No.	Particulars		Amount (Rs)
1	Share Capital
	Share Capital		5,000

2	Reserves and Surplus
	General Reserve		3,000
	Balance in Statement of Profit and Loss (Credit)		1,200
			4,200

3	Long-term Borrowings
	8% Debentures		3,000

4	Fixed Assets
	Tangible Assets (Cost)	9,000
	Depreciation	(700)	8,300

Answer:

Balance Sheet as at March 31, 2016
Particulars	Note No.	Amount (Rs in ‘000)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital		800
b. Reserves and Surplus		180
2. Non-Current Liabilities
Long-term Borrowings		1,000
3. Current Liabilities
Trade Payables		60
Total		2,040
II. Assets
1. Non-Current Assets
Fixed Assets (Tangible Assets)		1,600
2. Current Assets
Inventories		40
Trade Receivables		160
Cash and Cash Equivalents		240
Total		2,040

Answer:

Balance Sheet as at March 31, 2016
Particulars	Note No.	Amount (Rs)
I. Equity and Liabilities
1. Shareholders’ Funds
a. Share Capital	1	30,00,000
b. Reserves and Surplus	2	4,00,000
2. Non-Current Liabilities
a. Long-term Borrowings	3	6,00,000
3. Current Liabilities
a. Other Current Liabilities	4	8,00,000
b. Short-term Provisions	5	2,00,000
Total		50,00,000

II Assets
1. Non-Current Assets
a. Fixed Assets
i) Tangible Assets	6	30,00,000
b. Non-Current Investments	7	4,00,000
2. Current Assets
a. Inventories	8	6,00,000
b. Trade Receivables	9	8,00,000
c. Cash and Cash Equivalents	10	1,50,000
d. Short-term Loans and Advances	11	50,000
Total		50,00,000

*NOTES TO ACCOUNTS*
Note No.	Particulars		Amount (Rs)
1	Share Capital
	Equity Share Capital		20,00,000
	12% Preference Share Capital		10,00,000
			30,00,000
2	Reserves and Surplus
	Workmen Compensation Reserve		1,00,000
	Balance in Statement of Profit and Loss (Credit)		3,00,000
			4,00,000

3	Long-term Borrowings
	12% Debentures		6,00,000

4	Other Current Liabilities
	Current Liabilities		8,00,000

5	Short-term Provisions
	Provision for Taxation		2,00,000

6	Tangible Assets
	Fixed Assets (Cost)	46,60,000
	Depreciation	(16,60,000)	30,00,000

7	Non-Current Investments
	Investments		4,00,000

8	Inventories
	Stock		6,00,000

9	Trade Receivables
	Sundry Debtors		8,00,000

10	Cash and Cash Equivalents
	Cash		1,50,000

11	Short-term Loans and Advances
	Loans and Advances		50,000

Question 28:

Under which head following revenue items of a non-financial company will be classified or shown:
(i) Sales; (ii) Revenue from Services Rendered; (iii) Sale of Scrap; (iv) Interest Earned on Loans; and (v) Gain (profit) on Sale of Investments?

Answer:

ITEMS	HEAD
Sales	Revenue from Operations
Revenue from services rendered	Revenue from Operations
Sale of scrap	Revenue from Operations
Interest earned or Loans	Other Income
Profit on Sale of Investment	Other Income

Question 29:

Under which head following revenue items of a financial company will be classified or shown:
(i) Gain (Profit) on Sale of Building; (ii) Revenue from Project Consultancy Rendered; (iii) Sale of Scrap; (iv) Interest earned on Loans; and (v) Gain (Profit) on sale of Investments?

Answer:

ITEMS	HEAD
Profit on Sale of Building	Other Income
Revenue from Project Consultancy Rendered	Other Income
Sale of scrap	Other Income
Interest earned or Loans	Revenue from Operations
Profit on Sale of Investment	Revenue from Operations

Answer:

ITEMS	HEAD
Profit on Sale of Fixed Assets	Other Income
Fee Received for Arranging Loans	Revenue from Operations
Interest on Loans Given	Revenue from Operations
Profit on Sale of Investments	Revenue from Operations
Sale of a Miscellaneous item	Other Income

Question 31:

Under which head following revenue items of non-financial company will be classified or shown:
(i) Gain (Profit) on Sale of Fixed Asset; (ii) Fee Received for Arranging Loans; (iii) Interest on Loans Given; (iv) Gain (Profit) on Sale of Investments and (v) Sale of Miscellaneous Items?

Answer:

ITEMS	HEAD
Profit on Sale of Fixed Assets	Other Income
Fee Received for Arranging Loans	Other Income
Interest on Loans Given	Other Income
Profit on Sale of Investments	Other Income
Sale of a Miscellaneous item	Other Income

Question 32:

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.

Answer:

Question 33:

Calculate Cost of Materials Consumed from the following:
Opening Inventory of Materials ₹2,50,000; Finished Goods ₹1,00,000; Closing Inventory of Materials ₹2,25,000; Finished Goods ₹75,000; Raw Material purchased during the year ₹15,00,000.

Answer:

Note: Opening Inventory of Finished Goods and Closing Inventory of Finished Goods will not be considered as these are shown under Change in Inventory of Finished Goods.

Question 34:

Calculate Cost of Materials Consumed from the following:
Opening Inventory of Materials ₹3,50,000; Finished Goods ₹75,000; Stock-in-Trade ₹2,00,000; Closing Inventory of: Materials ₹3,25,000; Finished Goods ₹85,000; Stock-in-Trade ₹1,50,000; Purchases during the year: Raw Material ₹17,50,000; Stock-in-Trade ₹9,00,000.

Answer:

Note: Opening Inventory of Finished Goods and Closing Inventory of Finished Goods will not be considered as these are shown under Change in Inventory of Finished Goods. Also, Opening, Closing and Purchases of Stock-in-Trade are not considered as they are not part of cost of materials consumed.

Question 35:

From the following information, calculate Change in Inventory of Finished Goods: Opening Inventory and Closing Inventory of Finished Goods ₹2,00,000 and ₹1,75,000 respectively.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
(a)	Finished Goods
	Opening Inventory	2,00,000
	Less: Closing Inventory	1,75,000	25,000
			25,000

Rs 25,000 will be shown in the Statement of Profit and Loss against Change in Inventories of Finished Goods.

Question 36:

From the following information, calculate Change in Inventory of Finished Goods: Opening Inventory and Closing Inventory of Finished Goods ₹2,50,000 and ₹2,00,000 respectively.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
(a)	Finished Goods
	Opening Inventory	2,50,000
	Less: Closing Inventory	2,00,000	50,000
			50,000

Rs 50,000 will be shown in the Statement of Profit and Loss against Change in Inventories of Finished Goods.

Question 37:

From the following information, calculate Change in Inventory of Work-in-Progress: Opening and Closing Work-in-Progress ₹1,00,000 and ₹1,15,000 respectively.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
(a)	Work-in-Progress
	Opening Inventory	1,00,000
	Less: Closing Inventory	1,15,000	(15,000)
			(15,000)

(Rs 15,000) will be shown in the Statement of Profit and Loss against Change in Inventories of Work-in-Progress.

Question 38:

From the following information, calculate Change in Inventory of Work-in-Progress: Opening and Closing Work-in-Progress ₹1,50,000 and ₹1,45,000 respectively.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
(a)	Work-in-Progress
	Opening Inventory	1,50,000
	Less: Closing Inventory	1,45,000	5,000
			5,000

Rs 5,000 will be shown in the Statement of Profit and Loss against Change in Inventories of Work-in-Progress.

Question 39:

From the following information, calculate Change in Inventory of Stock-in-Trade: Opening and Closing Stock-in-Trade ₹5,00,000 and ₹4,50,000 respectively.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
(a)	Stock-in-Trade
	Opening Inventory	5,00,000
	Less: Closing Inventory	4,50,000	50,000
			50,000

Rs 50,000 will be shown in the Statement of Profit and Loss against Change in Inventories of Stock-in-Trade.

Question 40:

From the following information, calculate Change in Inventory of Stock-in-Trade: Opening and Closing Stock-in-Trade ₹5,00,000 and ₹4,00,000 respectively.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
(a)	Stock-in-Trade
	Opening Inventory	5,00,000
	Less: Closing Inventory	4,00,000	1,00,000
			1,00,000

Rs 1,00,000 will be shown in the Statement of Profit and Loss against Change in Inventories of Stock-in-Trade.

Question 41:

From the following information of Hospitality Ltd. for the year ended 31st March, 2018, calculate amount that will be shown in the Note to Accounts on Changes in inventiories of Finished Goods, WIP and stock-in-Trade:


Particluars	Opening Inventory (₹)	Closing inventory(₹)
Finished Goods	5,00,000	5,50,000
Work-in-Progress	4,50,000	4,25,000
Stock-in-Trade	6,50,000	6,00,000

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
	*Change in Inventories of Finished Goods, WIP and Stock-in-Trade*
(a)	Finished Goods
	Opening Inventory	5,00,000
	Less: Closing Inventory	5,50,000	(50,000)
			(50,000)
(b)	Work-in-Progress
	Opening Inventory	4,50,000
	Less: Closing Inventory	4,25,000	25,000
			25,000
(c)	Stock-in-Trade
	Opening Inventory	6,50,000
	Less: Closing Inventory	6,00,000	50,000
			50,000
	Net Change (a+b+c)		25,000

Rs 25,000 will be shown in the Statement of Profit and Loss against the Change in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
	*Change in Inventories of Finished Goods, WIP and Stock-in-Trade*
(a)	Finished Goods
	Opening Inventory	15,00,000
	Less: Closing Inventory	12,50,000	2,50,000
			2,50,000
(b)	Work-in-Progress
	Opening Inventory	10,50,000
	Less: Closing Inventory	9,25,000	1,25,000
			1,25,000
(c)	Stock-in-Trade
	Opening Inventory	9,50,000
	Less: Closing Inventory	8,00,000	1,50,000
			1,50,000
	Net Change (a + b + c)		5,25,000

Rs 5,25,000 will be shown in the Statement of Profit and Loss against the Change in Inventories of Finished Goods, Work-in-Progress and Stock-in-Trade.

Question 43:

From the following information compute the amount to be shown in Note to Accounts on Employees Benefit Expenses: Wages ₹ 5,40,000; Salaries ₹ 7,20,000; bonus ₹ 1,05,000; Staff Welfare Expenses ₹ 60,000 and Business Promotion Expenses ₹ 50,000.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (₹)
	*Employees Benefit Expenses*

	Wages	5,40,000
	Salaries	7,20,000
	Bonus	1,05,000
	Staff Welfare Expenses	60,000	14,25,000

	Amount to be shown in the Statement of Profit and Loss		*14,25,000*

*Amount spent on promotion of business is not included in Employees Benefit Expenses.

Question 44:

From the following information, prepare Note to Accounts on Employees Benefit Expenses:
Wages ₹ 2,70,000; Salaries ₹ 3,60,000; Staff Welfare Expenses 60,000; Printing and Stationery Expenses ₹ 20,000 and Business Promotion Expenses ₹ 50,000.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
	*Employees Benefit Expenses*

	Wages	2,70,000
	Salaries	3,60,000
	Staff Welfare Expenses	60,000	6,90,000

	Amount to be shown in the Statement of Profit and Loss		6,90,000

*Amount spent on promotion of business and printing & Stationary expenses are not included in Employees Benefit Expenses.

Question 45:

Out of the Following, identify the items that are shown in the Note to Accounts on Finance Costs:
(i) Interest paid on Borrowing from prince Finance Ltd.;
(ii) Interest paid on Term Loan to Bank;
(iii) Interest paid on Public Deposits;
(iv) Loss on Issue of Debentures Written off; and
(v) Bank Charges.

Answer:

Items that will be shown in the Notes to Accounts on Finance Costs are:

i. Interest paid on Borrowings from Prince Finance Ltd.;
ii. Interest paid on Term Loan to Bank;
iii. Interest paid on Public Deposits;
iv. Loss on Issue of Debentures written off.

The Bank charges are not shown under Finance Costs but under ‘Other Expenses’, as they are expenses for the services availed from the bank.

Question 46:

From the following information, prepare Note to Accounts on Finance Costs: Interest paid to Bank ₹ 75,000; Interest on Debentures ₹ 58,000; Loss on issue of Debentures written off ₹ 27,500; and Commitment Charges ₹ 15,000.

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
	*Finance Costs*
	Interest paid to bank	75,000
	Interest on Debentures	58,000
	Loss on Issue of Debentures written off	27,500
	Commitment charges	15,000	1,75,500

			1,75,500

Answer:

NOTES TO ACCOUNTS

Note No.	Particulars		Amount (Rs)
	*Depreciation and Amortisation Expenses*
	Depreciation
	Building	15,500
	Plant and Machinery	25,000
	Computers	60,000	1,00,500
	Amortisation
	Goodwill written off	7,500
	Patents written off	12,500	20,000
			1,20,500
	Amount to be shown in the Statement of Profit and Loss		*1,20,500*

Question 48:

Identify which of the following items will be shown in the Note to Accounts on Other Expenses? (i) Salaries; (ii) Postage Expenses; (iii) Telephone and Internet Expenses; (iv) Rent for warehouse; (v) Carriage Inwards; (vi) Depreciation on computers; (vii) Computer Software amortised; (viii) Computer Hiring Charges; (ix) Audit fee; (x) Bonus.

Answer:

Items that will be shown in the Notes to Accounts on ‘other expenses’ are
(ii) Postage Expenses;
(iii)Telephone and Internet Expenses;
(iv) Rent for warehouse;
(v) Carriage Inwards;
(viii) Computer Hiring charges;
(ix) Audit fee

Question 49:

Under which line item (major head) of the Statement of Profit and Loss of non-financial company will the following be shown:

(i) Sale of Goods; (ii) Revenue from Services Rendered; (iii) Interest Earned; (iv) Gain (Profit) on Sale of Assets; (v) Purchases of Stock-in-Trade; (vi) Salaries and Wages; (vii) Interest paid to Bank; (viii) Carriage Outward?

Answer:

ITEMS	MAJOR HEAD
Sale of Goods	Revenue from Operations
Revenue from Services rendered	Revenue from Operations
Interest earned	Other Income
Profit on Sale of Assets	Other Income
Purchase of Stock-in-Trade	Purchase of Stock-in-Trade
Salaries and Wages	Employees Benefit Expenses
Interest paid to Bank	Finance Costs
Carriage Outward	Other Expenses

Question 50:

Under which line item (major head) of the Statement of Profit and Loss of a financial company will the following be shown:

(i) Interest on Loans Given: (ii) Gain (Profit) on Sale of Securities; (iii) Loss on Sale of Fixed Assets; (iv) Interest paid on Deposits; (v) Depreciation on Computers; (vi) Goodwill Written off; (vii) Commission paid for Deposit Mobilisation; and (viii) Repairs Expenses?

Answer:

ITEMS	MAJOR HEAD
Interest on Loans Given	Revenue from Operations
Profit on Sale of Securities	Revenue from Operations
Loss on Sale of Fixed Assets	Other Expenses
Interest paid on Deposits	Finance Costs
Depreciation on Computers	Depreciation and Amortisation Expenses
Goodwill Written off	Depreciation and Amortisation Expenses
Commission paid for Deposit Mobilisation	Finance Costs
Repairs Expenses	Other Expenses

Question 51:

Under which line item of the financial statements following items will be shown:
(i) Sales; (ii) Loss on Sale of Vehicle; (iii) Debentures; (iv) Unamortised Loss on Issue of Debentures (to be written off within 12 months of the date of Balance Sheet); (v) Encashable Leave Payable at the Time of Retirement; (vi) Tax Reserve; (vii) Carriage on Purchases of Stock-in-Trade; and (viii) Telephone and Internet Expenses?

Answer:

Items	Line Items of Financial Statements
Sales	Revenue from Operations
Loss on Sale of Vehicle	Other Expenses
Debentures	Long Term Borrowings
Unamortised Loss on Issue of Debentures (to be written off within 12 months of the date of Balance Sheet)	Other Non-Current Assets
Encashable Leave Payable at the time of Retirement	Long Term Provisions
Tax Reserve	Reserves and Surplus
Carriage on Purchase of Stock-in Trade	Other Expenses
Telephone and Internet expenses	Other Expenses

Answer:

Values that a company must observe while preparing its financial statements.
(a) The financial statements must be drawn following the accounting concepts, principles, procedures
(b) The financial statements must be drawn following the ethical and legal framework

Item	Major Head	Sub-Head
Capital Reserve	Shareholders’ Funds	Reserves & Surplus
Calls-in-Advance	Current Liabilities	Other Current Liabilities
Loose Tools	Current Assets	Inventories
Bank Overdraft	Current Liabilities	Short Term Borrowings

Analysis Of Financial Statements Ts Grewal 2018 for Class 12 Commerce Accountancy Chapter 1 - Financial Statements Of A Company

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