12th | Volume 3 | Chapter:1 | Question No. 6 to 10 | Financial Statements of A Company

Question 6:

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 7:

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 8:

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 9:

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 10:

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