Final Accounts of a Company
TABLE OF CONTENTS
 

Q.1. Give major headings of the assets and liabilities-side of a company’s balances sheet as per Schedule VI, Part I.

Answer: Major headings of Assets side

  1. Fixed Assets
  2. Investments
  3. Current Assets, Loans and Advances: Current Assets, Loans and Advances
  4. Miscellaneous Expenditures
  5. Profit & Loss Account (Loss in Business)

Major headings of Liabilities side

  1. Share Capital
  2. Reserves and Surplus
  3. Secured Loans
  4. Unsecured Loans
  5. Current Liabilities and Provisions
    1. Current Liabilities
    2. Provisions

Q.2. What is contingent liability? Mention four examples of contingent liabilities. Where is it shown in the balance sheet?

(CBSE Delhi 1999)

Answer: A possible future liability, which depends on the happenings of certain uncertain event, is called contingent liability. These liabilities are not shown in the total of liability side, but are shown as a footnote to the balance sheet.

The following are some examples of contingent liabilities: -

  1. Uncalled liabilities on partly paid shares
  2. Liabilities under Guarantee
  3. Arrears of dividends on cumulative preference shares
  4. Claim against the company now acknowledged as debts
  5. Liabilities on Bills Receivable discounted but not matured.

Q.3. Under what headings will you show the following items in the balance sheet of a company:

  1. Goodwill
  2. Unclaimed Dividends
  3. Provision for Tax
  4. Share Premium Account
  5. Loose Tools

(CBSE 1996)

Answer:

Items

Headings

Sub-headings

Goodwill

Fixed Assets

---

Unclaimed Dividend

Current Liabilities and Provisions

Current Liabilities

Provision for Tax

Current Liabilities and Provisions

Provisions

Share Premium A/c

Reserves and Surplus

---

Loose Tools

Current Assets, Loans and Advances

Current Assets

Q.4. Give the headings under which the following items will be shown in a company’s balance sheet as per Schedule VI, Part I:

  1. Sundry Creditors
  2. Debentures Sinking Fund
  3. Bills Receivable
  4. Discount on Issue of Debentures
  5. Motor Car

Answer:

Items

Headings

Sub-headings

Sundry Creditors

Current Liabilities and Provisions

Current Liabilities

Debentures Sinking Fund

Reserves and Surplus

---

Bills Receivable

Current Asset, Loans and Advances

Loans and Advances

Discount on Issue of Debentures

Miscellaneous Expenditures

---

Motor Car

Fixed Assets

---

Q.5. Give the headings under which any four of the following items will be shown in Company’s Balance Sheet.

  1. Debentures
  2. Interest accrued on investment
  3. Goodwill
  4. Preliminary Expenses
  5. Bills of Exchange

(CBSE 1991 (Foreign))

Answer:

Items

Headings

Sub-headings

Debentures

Secured Loans

---

Interest accrued on Investment

Current Assets, Loans and Advances

Current Assets

Goodwill

Fixed Assets

---

Preliminary Expenses

Miscellaneous Expenditures

---

Bills of Exchange

Current Assets, Loans and Advances

Loans and Advances



Q.6. Give the Performa of balance sheet in horizontal form according to the requirements of Schedule VI of the Companies Act 1956.

Solution:

Balance Sheet of---Co. Limited
As at----

Figures for the previous year

Rs.

 

 

Liabilities

Rs.

Figures for the current year

Rs.

Figures for the previous year

Rs.

 

 

Assets

Rs.

Figures for the current year

Rs.

 

(1) Share Capital

   

(1) FIXED ASSETS:

 
 

Authorised Capital:

   

1. Goodwill

 

XXX

… Shares of Rs. … each

XXX

 

2. Land

 

Issued Capital:

3. Building

XXX

… Equity Shares of Rs. … each

XXX

 

4. Leaseholds

 

XXX

… Preference Share of Rs. … each

XXX

 

5. Railway Sidings

 
 

Subscribed Capital:

   

6. Plant and Machinery

 
 

… Equity Shares of Rs. … each Rs. … Called up XXX

   

7. Furniture and Fittings

 
 

… Preference Share of Rs. … each Rs. … Called up XXX

   

8. Development of Property

 
 

Less Calls Unpaid XXX

   

9. Patents, Trade Marks and Designs

 
 

(i) By directors XXX

   

10. Live Stocks

 
 

(ii) By Others XXX

   

11. Vehicles etc.

 

XXX

Add Forfeited shares XXX

XXX

 

(2) INVESTMENTS:

 
 

(2) RESERVES AND SURPLUS:

   

(3) CURRENT ASSETS, LOANS AND ADVANCES:

 

XXX

1. Capital Reserve, not available for Dividend

XXX

 

(A) Current Assets:

 

XXX

2. Capital Redemption Reserve

XXX

 

1. Interest accrued on investments

 

XXX

3. Share Premium Account

XXX

 

2. Stores and Spare parts

 

XXX

4. Other Reserves specifying the nature of reserve and the amount in respect thereof.

Less: Debit balance in Profit & Loss account (if any)

XXX

 

3. Loose Tools

 

XXX

5. Surplus, that is balance in Profit and Loss account after providing for proposed allocation namely:

Dividend, Bonus or Reserves

XXX

 

4. Stock in trade

 

XXX

6. Proposed addition to reserves

XXX

 

5. Work in progress

 

XXX

7. Sinking Funds

XXX

 

6. Sundry Debtors:

  1. Debts outstanding for a period exceeding 6 months
  2. Other Debts

Less: Provision

 
 

(3) SECURED LOANS:

   

7. (a) Cash balance in hand

(b) Bank balance:

  1. With scheduled Banks
  2. With others
 

XXX

1. Debentures

XXX

 

(B) Loans and Advances:

 

XXX

2. Loans and Advances from Banks.

XXX

 

8. (a) Advances and loans to subsidiaries

(b) advances and loans to partnership firms in which the Company or any of its subsidiaries is a partner

 

XXX

3. Loans and Advances from subsidiaries

XXX

 

9. Bills of Exchange

 

XXX

4. Other Loans and Advances

XXX

 

10. Advances recoverable in cash or in kind (e.g. Rates, Taxes, Insurance, etc. prepaid)

 

XXX

5. Interest accrued and due on secured loans

XXX

 

11. Balances with customs, Port Trusts, and excise authorities etc.

 
 

(4) UNSECURED LOANS:

   

(4) MISCELLANEOUS EXPENDITURE:

 

XXX

1. Fixed Deposits

XXX

 

1. Preliminary Expenses

 

XXX

2. Loans and Advances from subsidiaries

XXX

 

2. Expenses, including commission or Brokerage on under writing of Shares or Debentures

 

XXX

3. Short Term Loans and Advances

  1. From Banks
  2. From Others

XXX

 

3. Discount allowed on the issue of Shares or Debentures

 

XXX

4. Other Loans and Advances

  1. From Banks
  2. From Others

XXX

 

4. Interest paid out of capital during construction period

 
 

(5) CURRENT LIABILITIES AND PROVISIONS:

   

5. Development expenditure not adjusted

 
 

(A) Current Liabilities:

   

6. Other sums (specifying nature)

 

XXX

1. Acceptances

XXX

 

5. PROFIT & LOSS ACCOUNT: (This is shown only when its debit balance count not be written off out of others reserves)

 

XXX

2. Sundry Creditors

XXX

     

XXX

3. Subsidiary Companies

XXX

     

XXX

4. Unclaimed Dividends

XXX

     

XXX

5. Interest accrued but not due on loans

XXX

     

XXX

6. Advance payments and unexpired discounts for the portion for which value has still to be given, e.g. in the case of the following classes of companies: Newspaper, Fire Insurance, Theatres, Clubs, Banking, Steamship Companies etc.

XXX

     

XXX

7. Other Liabilities (if any)

XXX

     
 

(B) Provisions:

       

XXX

8. Proposed Dividends

XXX

     

XXX

9. Provision for Taxation

XXX

     

XXX

10. Provision for Contingencies

XXX

XXX

11. Provision for Provident Fund schemes

XXX

     

XXX

12. Provision for insurance, pension and similar staff benefit schemes.

XXX

     

XXX

13. Other Provisions

XXX

     
 

(6) CONTINGENT LIABILITIES (by way of foot- note only):

       
 

1.Uncalled liabilities on partly paid shares

       
 

2.Liabilities under Guarantee

       
 

3.Arrears of dividends on cumulative preference shares

       
 

4.Claim against the company now acknowledged as debts

       

5.Liabilities on Bills Receivable discounted but not matured.

XXX

 

XXX

XXX

 

XXX

 

 

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