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

Fixed Assets
Investments
Current Assets, Loans and Advances: Current Assets, Loans and Advances
Miscellaneous Expenditures
Profit & Loss Account (Loss in Business)

Major headings of Liabilities side

Share Capital
Reserves and Surplus
Secured Loans
Unsecured Loans
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: -

Uncalled liabilities on partly paid shares
Liabilities under Guarantee
Arrears of dividends on cumulative preference shares
Claim against the company now acknowledged as debts
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:

Goodwill
Unclaimed Dividends
Provision for Tax
Share Premium Account
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:

Sundry Creditors
Debentures Sinking Fund
Bills Receivable
Discount on Issue of Debentures
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.

Debentures
Interest accrued on investment
Goodwill
Preliminary Expenses
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: Debts outstanding for a period exceeding 6 months Other Debts Less: Provision
	(3) SECURED LOANS:			7. (a) Cash balance in hand(b) Bank balance: With scheduled Banks 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 From Banks From Others	XXX		3. Discount allowed on the issue of Shares or Debentures
XXX	4. Other Loans and Advances From Banks 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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