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Test: Financial Statements of a Company- Assertion & Reason Type Questions - Commerce MCQ


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4 Questions MCQ Test Accountancy Class 12 - Test: Financial Statements of a Company- Assertion & Reason Type Questions

Test: Financial Statements of a Company- Assertion & Reason Type Questions for Commerce 2024 is part of Accountancy Class 12 preparation. The Test: Financial Statements of a Company- Assertion & Reason Type Questions questions and answers have been prepared according to the Commerce exam syllabus.The Test: Financial Statements of a Company- Assertion & Reason Type Questions MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Financial Statements of a Company- Assertion & Reason Type Questions below.
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Test: Financial Statements of a Company- Assertion & Reason Type Questions - Question 1

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): All contingent liabilities are shown in the non-current liabilities section of the balance sheet.

Reason (R): A contingent liability refers to the claim which is uncertain to arise/which may or may not rise/which is dependent on a happening in future.

Detailed Solution for Test: Financial Statements of a Company- Assertion & Reason Type Questions - Question 1
All contingent liabilities are shown as a footnote to the balance sheet.
Test: Financial Statements of a Company- Assertion & Reason Type Questions - Question 2

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): The balance sheet of the company needs to show the complete detail of the share capital of the company.

Reason (R): As per Schedule III of Companies Act, 2013, the Balance Sheet must disclose authorized capital, issued capital and subscribed capital for each class of share capital (i.e. for both Equity and Preference Shares) besides the called-up amount made by the company and paid-up amount made by the shareholders.

Detailed Solution for Test: Financial Statements of a Company- Assertion & Reason Type Questions - Question 2
Share capital is reported by a company on its balance sheet in the shareholder's equity section. The information may be listed in separate line items depending on the source of the funds. These usually include a line for common stock, another for preferred stock, and a third for additional paid-in capital.
Test: Financial Statements of a Company- Assertion & Reason Type Questions - Question 3

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Financial statements are the end products of the accounting process which reveal the financial results of a specified period and financial position as on a particular date.

Reason (R): The basic objective of these statements is to provide information required for decision making by the management as well as other outsiders who are interested in the affairs of the undertaking, as per Section 129 Schedule III to the Companies Act, 2013 every year.

Detailed Solution for Test: Financial Statements of a Company- Assertion & Reason Type Questions - Question 3
Financial statements are the end products of the accounting process which reveal the financial results of a specified period and financial position as on a particular date, so that the financial position of the company can be ascertained and analysed.
Test: Financial Statements of a Company- Assertion & Reason Type Questions - Question 4

Directions : In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:

Assertion (A): Accounts Payables are recorded in the heading of Current Liabilities in the Balance Sheet of the company.

Reason (R): Accounts Payable is the money the company currently owes to its suppliers, partners, and employees.

Detailed Solution for Test: Financial Statements of a Company- Assertion & Reason Type Questions - Question 4
Accounts payable is the money a company owes its vendors, while accounts receivable is the money that is owed to the company, typically by customers. When one company transacts with another on credit, one will record an entry to accounts payable on their books while the other records an entry to accounts receivable.
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