Class 12-commerce NCERT Solutions Accountancy Chapter 3 - Financial Statements of a Company
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Financial Statements of a Company Exercise 165
Solution SA 1
The Financial Statements is a summary of accounts of a business enterprise, with the Balance Sheet reflecting the assets, liabilities and capital as on a certain date and income statement showing the results and operations during a certain period.
Solution SA 2
Limitation of financial statements:
- Historical Records: Financial Statements provide information which is historical in nature and therefore, it is not useful for the potential investors or lenders as it does not provide any information of the future business or its future financial position.
- Affected by Estimated: Financial Statements are the outcome of accounting concepts and conventions combined with estimates and are therefore, not free from bias.
- Different Accounting Practices: Financial Statements can be drawn up on the basis of different accounting practices. Profitability determined by each of these practise will be different and hence, there is no standard practice which can be followed by all.
- Qualitative Elements are Ignored: Financial Statements are based completely on monetary items and therefore, many non-monetary important factors that affect the profitability of the business are ignored.
- Price Level Changes are Ignored: Financial Statements follow the historical cost concept while disclosing the value of assets. Because of such practices, current market value is not taken into consideration.
- Does not meet the Interests of all Parties: Financial Statements for a period are used by a number of interested users for various purposes and interests. It is not possible to meet the purpose of all interested parties.
- Aggregate Information: Financial Statements show aggregate information and not detailed information and hence, it is not useful for the users in decision making.
Solution SA 3
Financial Statements are prepared with an objective to:
- compute profit or loss from operating activities of the business.
- present a true view of the financial position of the business.
- provide information on economic resources of the business.
- provide data about the inflow and outflow of cash and cash equivalent.
- determine the effectiveness of the management activities to ensure better performance of its business.
- provide necessary information to the users of such financial statements.
- present and disclose accounting policies and conventions used in the preparation of books of accounts of the business entity.
Solution SA 4
Importance of financial statements to its various users:
- Shareholders: They are concerned in the profitability and viability of the capital invested by them in the business. The financial statements prepared by the business enable them to have adequate information to evaluate the financial health and performance of the business.
- Creditors: These are individuals and organisations to whom a business owes money on account of credit purchases of goods and services. Hence, creditors require information about the credit worthiness and liquidity position of the business.
- Government: It requires information to determine various macroeconomic variables such as national income, GDP, industrial growth etc. The accounting information helps the government in formulation of various policies and to address various economic problems such as unemployment, poverty etc.
- Investors: These are parties who have invested or are planning to invest in the business of an enterprise. To evaluate the viability and prospects of their investments, investors need information on the profitability and solvency position of the business.
Solution SA 5
|
Items |
Main Head |
Sub-Head |
|
|
i. |
Loose Tools |
Current Assets |
Inventories |
|
ii. |
Uncalled liability on partly paid-up shares |
Contingent Liability and Capital Commitments |
Capital Commitments |
|
iii. |
Debentures Redemption Reserve |
Shareholder's Funds |
Reserve and Surplus |
|
iv. |
Mastheads and publishing titles |
Non-Current Assets |
Fixed Assets: Intangible Assets |
|
v. |
10% debentures |
Non-Current Liabilities |
Long-Term Borrowings |
|
vi. |
Proposed dividends |
Current Liabilities |
Short-Term Provision |
|
vii. |
Share forfeited account |
Shareholder's Funds |
Subscribed Capital (to be added) |
|
viii. |
Capital Redemption Reserve |
Shareholder's Funds |
Reserve and Surplus |
|
ix. |
Mining Rights |
Non-Current Assets |
Fixed Assets: Intangible Assets |
|
x. |
Work-in-progress |
Current Assets |
Inventories |
Financial Statements of a Company Exercise 166
Solution Num 1
|
Extract of Balance Sheet |
||
|
Particulars |
Note No. |
Rs. |
|
I. Equity and Liabilities |
||
|
1. Shareholder's Funds |
||
|
a. Share Capital |
||
|
b. Reserves and Surpluses |
|
|
|
2. Non-Current Liabilities |
|
|
|
-------Long-term Borrowings |
1 |
2,00,000 |
|
3. Current Liabilities |
|
|
|
-------Other Current Liabilities |
|
|
|
-------Short-term Provisions |
2 |
16,000 |
|
|
|
|
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
a. Fixed Assets |
|
|
|
i. Tangible Assets |
3 |
4,75,000 |
|
ii. Intangible Assets |
4 |
30,000 |
|
b. Non-Current Investments |
|
|
|
2. Current Assets |
|
|
|
a. Inventories |
5 |
1,52,000 |
|
b. Trade Receivables |
6 |
1,20,000 |
|
c. Cash and Cash Equivalents |
7 |
1,35,000 |
|
d. Other Current Assets |
8 |
2,60,000 |
Notes to Accounts
|
Particulars |
Rs. |
|
|
1. Long Term Borrowings |
|
|
|
------10% Debentures |
|
2,00,000 |
|
2. Short Term Provisions |
|
|
|
------Provision for Tax |
|
16,000 |
|
3. Tangible Assets |
|
|
|
------Motor Vehicles |
|
4,75,000 |
|
4. Intangible Assets |
|
|
|
------Goodwill |
|
30,000 |
|
5. Inventory |
|
|
|
------Loose Tools |
12,000 |
|
|
------Stock |
1,40,000 |
1,52,000 |
|
6. Trade Receivables |
|
|
|
------Bill receivable |
|
1,20,000 |
|
7. Cash and Cash equivalents |
|
|
|
------Cash at bank |
|
1,35,000 |
|
8. Other Current Assets |
|
|
|
------Preliminary Expenses |
2,40,000 |
|
|
------Discount on Issue of Shares |
20,000 |
2,60,000 |
|
|
|
|
Solution NUM 2
|
Balance Sheet as on April 01,2017 |
||
|
Particulars |
Note No. |
Rs. |
|
I. Equity and Liabilities |
||
|
1. Shareholder's Funds |
||
|
a. Share Capital |
||
|
b. Reserves and Surpluses |
|
|
|
2. Non-Current Liabilities |
|
|
|
a. Long-term Borrowings |
1 |
10,00,000 |
|
3. Current Liabilities |
|
|
|
b. Other Current Liabilities |
|
|
|
c. Short-term Provisions |
|
|
|
Total |
|
10,00,000 |
|
|
|
|
|
I. II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
a. Other Non-Current Assets |
2 |
1,60,000 |
|
2. Current Assets |
|
|
|
b. Other Current Assets |
3 |
40,000 |
|
c. Cash and Cash Equivalents |
4 |
8,00,000 |
|
Total |
|
10,00,000 |
|
|
|
|
Notes to Accounts
|
Particulars |
Rs. |
|
1. Long Term Borrowings |
|
|
------10% Debentures |
10,00,00 |
|
2. Other Non-current assets |
|
|
------Unamortized discount on issue of Debentures |
1,60,000 |
|
3. Other Current Assets |
|
|
------Unamortized discount on issue of Debentures |
40,000 |
|
4. Cash and Cash Equivalents |
|
|
------Bank |
8,00,000 |
Financial Statements of a Company Exercise 167
Solution NUM 3
|
Balance Sheet of Gitanjali Ltd. |
||
|
Particulars |
Note No. |
Rs. |
|
I. Equity and Liabilities |
||
|
1. Shareholder's Funds |
||
|
a. Share Capital |
1 |
32,00,000 |
|
b. Reserves and Surpluses |
2 |
6,00,000 |
|
2. Non-Current Liabilities |
|
|
|
a. Long-term Borrowings |
3 |
12,00,000 |
|
3. Current Liabilities |
|
|
|
a. Other Current Liabilities |
4 |
3,00,000 |
|
b. Short-term Borrowings |
5 |
4,00,000 |
|
c. Short-term Provisions |
6 |
5,00,000 |
|
Total |
|
62,00,000 |
|
|
|
|
|
I. II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
a. Fixed Assets |
|
|
|
i. Tangible assets |
7 |
30,00,000 |
|
ii. Intangible Assets |
|
|
|
b. Non-Current Investments |
|
|
|
2. Current Assets |
|
|
|
a. Inventories |
|
14,00,000 |
|
b. Current Investments |
|
8,00,000 |
|
c. Cash and Cash Equivalents |
|
10,00,000 |
|
Total |
|
62,00,000 |
Notes to Accounts
|
Particulars |
Rs. |
|
|
1. Share Capital |
20,00,000 |
|
|
-------Equity Share Capital |
12,00,000 |
32,00,000 |
|
-------Preference Share Capital |
|
|
|
2. Reserve and Surplus |
|
|
|
-------Debenture Redemption Reserve |
|
12,00,000 |
|
3. Long-term Borrowings |
|
|
|
-------Public Deposits |
|
3,00,000 |
|
4. Other Current Liabilities |
|
|
|
-------Outstanding Expenses |
|
4,00,000 |
|
5. Short-Term Borrowings |
|
|
|
-------Loan from Zaveri Ltd. |
|
5,00,000 |
|
6. Short-Term Provisions |
|
|
|
-------Proposed Dividend |
|
30,00,000 |
|
7. Tangible Assets |
|
|
|
-------Land and Building |
20,00,000 |
|
|
-------Plant and Machinery |
10,00,000 |
30,00,000 |
Solution NUM 4
|
Balance Sheet of Jam Ltd. |
||
|
Particulars |
Note No. |
Rs. |
|
I. Equity and Liabilities |
||
|
1. Shareholder's Funds |
||
|
a. Share Capital |
1 |
22,00,000 |
|
b. Reserves and Surpluses |
2 |
6,00,000 |
|
2. Non-Current Liabilities |
|
|
|
a. Long-term Borrowings |
3 |
12,00,000 |
|
3. Current Liabilities |
|
|
|
a. Short-term Provisions |
|
|
|
b. Trade Payables |
4 |
3,50,000 |
|
c. Short-term Provisions |
5 |
2,50,000 |
|
Total |
|
46,00,000 |
|
|
|
|
|
II. Assets |
|
|
|
i. Non-Current Assets |
|
|
|
a. Fixed Assets |
|
|
|
i. Tangible Assets |
6 |
24,00,000 |
|
b. Non-Current Investments |
|
10,00,000 |
|
ii. Current Assets |
|
|
|
a. Inventories |
|
7,00,000 |
|
b. Cash and Cash Equivalents |
7 |
5,00,000 |
|
Total |
|
46,00,000 |
Notes to Accounts
|
Particulars |
Rs. |
|
|
1. Share Capital |
|
|
|
------Equity Share Capital |
16,00,000 |
|
|
------Preference Share Capital |
6,00,000 |
22,00,000 |
|
2. Reserve and Surplus |
|
|
|
------General Reserve |
|
6,00,000 |
|
3. Long Term Borrowings |
|
|
|
------12% Debentures |
|
12,00,000 |
|
4. Trade Payables |
|
|
|
------Creditors |
2,00,000 |
|
|
------Bills Payable |
1,50,000 |
3,50,000 |
|
5. Short-Term Provisions |
|
2,50,000 |
|
------Provision for Taxation |
|
|
|
6. Tangible Assets |
|
24,00,000 |
|
------Land and Building |
16,00,000 |
|
|
------Plant and Machinery |
8,00,000 |
24,00,000 |
|
7. Cash and Cash Equivalents |
|
|
|
------Bank |
|
5,00,000 |
|
|
|
|
Solution NUM 5
|
Balance Sheet as on March 31 ,2017 |
||
|
Particulars |
Note No. |
Rs. |
|
I. Equity and Liabilities |
||
|
1. Shareholder's Funds |
||
|
a. Share Capital |
1 |
10,00,000 |
|
b. Reserves and Surpluses |
2 |
10,000 |
|
2. Non-Current Liabilities |
|
|
|
a. Long-term Borrowings |
3 |
3,00,000 |
|
3. Current Liabilities |
|
|
|
a. Other Current Liabilities |
4 |
1,00,000 |
|
Total |
|
14,10,000 |
|
|
|
|
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
a. Fixed Assets |
|
|
|
i. Tangible Assets |
5 |
10,00,000 |
|
b. Non-Current Investments |
6 |
3,00,000 |
|
2. Current Assets |
|
|
|
a. Inventories |
7 |
1,00,000 |
|
b. Other Current Assets |
8 |
10,000 |
|
Total |
|
14,10,000 |
|
|
|
|
Notes to Accounts
|
Particulars |
Rs. |
|
|
1. Share Capital |
|
|
|
------Equity Share Capital (50,000*share of Rs.20 each) |
|
10,00,000 |
|
2. Reserve and Surplus |
|
|
|
------Capital Redemption Reserve |
1,00,000 |
|
|
------Less: Statement of Profit or Loss (Debit) |
90,000 |
3,00,000 |
|
3. Long-term Borrowings |
|
|
|
------10% Debentures |
|
1,00,000 |
|
4. Other Current Liabilities |
|
|
|
------Unpaid Dividend |
90,000 |
|
|
------Share Option Outstanding |
10,000 |
1,00,000 |
|
5. Tangible Assets |
|
|
|
------Building |
|
10,00,000 |
|
6. Non-Current Investments |
|
|
|
------Share of Metro Treys |
|
3,00,000 |
|
7. Inventory |
|
|
|
------Stores and Spares |
|
1,00,000 |
|
8. Other Current Assets |
|
|
|
------Discount on Issue of 10% Debentures |
|
10,000 |
|
|
|
|
Solution NUM 6
|
Extract of Balance Sheet as on March 31,2017 |
||
|
Particulars |
Note No. |
Rs. |
|
I. Equity and Liabilities |
||
|
1. Shareholder's Funds |
||
|
a. Share Capital |
||
|
b. Reserves and Surpluses |
|
|
|
2. Non-Current Liabilities |
|
|
|
a. Long-term Borrowings |
1 |
35,00,000 |
|
III. Current Liabilities |
|
|
|
a. Other Current Liabilities |
2 |
2,50,000 |
|
|
|
|
Notes to Accounts
|
Particulars |
Rs. |
|
|
1. Long Term Borrowings |
|
|
|
------12% Debentures |
25,00,000 |
|
|
------Bank Loan |
10,00,000 |
35,00,000 |
|
|
|
|
|
2. Other Current Liabilities |
|
2,50,000 |
|
------Interest on Debentures |
|
|
|
|
|
|
Financial Statements of a Company Exercise 168
Solution NUM 7
|
Extract of Balance Sheet as on March 31,2017 |
||
|
Particulars |
Note No. |
Rs. |
|
I. Equity and Liabilities |
||
|
1. Shareholder's Funds |
||
|
a. Share Capital |
1 |
5,000 |
|
b. Reserves and Surpluses |
2 |
4,200 |
|
2. Non-Current Liabilities |
|
|
|
a. Long-term Borrowings |
3 |
3,000 |
|
3. Current Liabilities |
|
2,500 |
|
Total |
|
14,700 |
|
|
|
|
|
II. Assets |
|
|
|
1. Non-Current Assets |
|
|
|
a. Fixed Assets |
|
|
|
i. Tangible Assets |
4 |
8,300 |
|
2. Current Assets |
|
|
|
a. Cash and Cash Equivalents |
5 |
6,100 |
|
b. Other Current Assets |
6 |
300 |
|
Total |
|
14,700 |
|
|
|
|
Notes to Accounts
|
Particulars |
Rs. |
|
|
1. Share Capital |
|
|
|
6% Preference Share Capital |
|
5,000 |
|
|
|
|
|
2. Reserve and Surplus |
|
|
|
--------General Reserve |
3,000 |
|
|
--------Statement of Profit or Loss |
1,200 |
4,200 |
|
|
|
|
|
3. Long Term Browsing |
|
|
| ------10% Debenture |
|
3,000 |
|
4. Tangible Assets |
|
8,300 |
|
------Fixed Assets |
9,000 |
|
|
--------Less: Depreciation |
700 |
8,300 |
|
|
|
|
|
5. Cash and Cash Equivalents |
|
|
|
--------Cash |
|
6,100 |
|
6. Other Current assets |
|
|
|
Preliminary Expenses |
|
300 |
|
|
|
|
