Chapter – 9: Final Accounts of a Company

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Final Accounts of a Company:

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.  

    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