NCERT Numerical Questions & Answers - Financial Statements of a Company

# NCERT Numerical Questions & Answers - Financial Statements of a Company - Accountancy Class 12 - Commerce

Q1 :
The following is the trial balance on June 30, 2006 of the Modern Manufacturing Company Ltd.

Stock, on June 30, 2006 Rs 8,200. You are required to make out the trading account, and profit and loss account for the year ended June 30, 2006 and the balance sheet as on the date. You are also to make provision in respect of the following:

(i) Depreciate machinery @ 10% per annum;

(ii) Reserve 5% for discount on debtors;

(iii) One month rent Rs 45 was due on 30th June; and

(iv) Six month's insurance, included in general expenses, was unexpired at Rs 75.

Modern Manufacturing Company Ltd.

Note: It has been assumed that the Dividend Paid, August, 2005 of Rs 500 has been declared and paid in the same accounting period.

Q2 :
The following is the trial balance of Alfa Ltd., for the year ended June 30, 2005

Prepare the Profit and Loss Account and Balance Sheet of the company after taking the following particulars into consideration:

a) The original cost of land and building plant and machinery and furniture and fittings was Rs 2,50,000, Rs 6,00,000 and Rs 60,000 respectively. Additions during the year were: Building Rs 50,000 and Plant Rs 20,000.

b) Depreciation is to be charged on plant and machinery and furniture and fitting at 10 per cent on original cost.

c) Of the sundry debtors, Rs 10,000 is outstanding for a period exceeding 6 months, Rs 5,000 are considered doubtful, while the others are considered good.

d) The directors are entitled to a commission at 1 percent of the net profits before charging such commission.

e) Stock on 30th June, 2005 is Rs 1,30,000.

f) Provide Rs 34,800 for income tax

Alfa Ltd.

Balance Sheet as on June 30, 2005

Q3 :
The following balances appeared in the books of Parasuram Flour Mills Ltd., as on December 31, 2005 :

Prepare the company's trading and profit and loss account for the year and balance sheet as on December 31, 2005 after taking the following adjustments into account:
(a) Stock on December 31, 2005 were: Wheat at cost, Rs 14,900: Flour at market price, Rs 21,700;

(b) Outstanding expenses: Manufacturing expenses, Rs 23,500; and salaries and wages, Rs 1,200;

(c) Provide depreciation : Building at 2% ; Plant and machinery at 10%: Furniture at 10% ; and Vehicle 20%.

(d) Interest accrued on Government Securities, Rs100:

(e) A tax provision of Rs 8,000 is considered necessary.

(f) The directors propose a dividend of 20%.

(g) The authorised capital consists of 12,000 equity shares of Rs 10 each of which 7,200 shares were issued and fully paid up.

Parasuram Flour Mills Ltd.

Q4 :

An unexperienced accountant prepared the following trial balance of Bang Vikas Ltd., for the year ending 31.12.2005. The cash in hand on 31.12.2005 was Rs 750.

After locating the mistakes and making the following adjustments prepare trading and profit and loss account and balance sheet in the prescribed form.

(i) Stock on 31.12.2005 Rs 95,000 and

(ii) Write-off preliminary expenses.

Bang Vikas Ltd

Q5 :
The Silver Ore Co. Ltd. was formed on April 1, 2005 with an authorised capital of Rs6,00,000 in shares of Rs 10 each. Of these 52,000 shares had been issued and subscribed but there were calls in arrear on 100 shares @ Rs 2.50. From the following trial balance as on March 31, 2006 prepare the trading and profit and loss account and the balance sheet:

(i) Depreciate plant and railways by 10%; furniture and building by 5%;

(ii) Write off a third of the promotion expenses;

(iii) Value of silver ore on March 31, 1969 Rs 15,000, The directors forfeited on December 20, 1968, 100 shares on which only Rs 7.50 had been paid.

Silver Ore Co. Ltd.

The document NCERT Numerical Questions & Answers - Financial Statements of a Company | Accountancy Class 12 - Commerce is a part of the Commerce Course Accountancy Class 12.
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## Accountancy Class 12

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## FAQs on NCERT Numerical Questions & Answers - Financial Statements of a Company - Accountancy Class 12 - Commerce

 1. What are financial statements of a company?
Ans. Financial statements of a company are formal records that present the financial activities and performance of a company. These statements provide information about the company's financial position, cash flows, revenues, expenses, and other important financial data.
 2. What are the types of financial statements?
Ans. The main types of financial statements are: - Income Statement: It shows the company's revenues, expenses, and net income or loss over a specific period. - Balance Sheet: It provides a snapshot of the company's financial position at a specific point in time, including its assets, liabilities, and shareholders' equity. - Cash Flow Statement: It shows the inflows and outflows of cash and cash equivalents during a specific period, categorized into operating activities, investing activities, and financing activities. - Statement of Changes in Equity: It presents the changes in shareholders' equity during a specific period, including the issuance of shares, dividends, and retained earnings.
 3. How are financial statements useful for decision-making?
Ans. Financial statements are essential for decision-making as they provide valuable information about a company's financial health. They help stakeholders, such as investors, creditors, and management, in assessing the company's profitability, liquidity, solvency, and overall performance. By analyzing financial statements, decision-makers can make informed choices regarding investments, credit decisions, expansion plans, and resource allocation.
 4. How are financial statements prepared?
Ans. Financial statements are prepared by following generally accepted accounting principles (GAAP). The process involves several steps, including: 1. Recording Transactions: All financial transactions are recorded in the company's books of accounts using appropriate accounting methods. 2. Adjusting Entries: Adjusting entries are made at the end of the accounting period to ensure that revenues and expenses are recognized in the correct period. 3. Trial Balance: A trial balance is prepared to ensure that the debits and credits are balanced. 4. Financial Statement Preparation: Using the trial balance and additional information, financial statements such as the income statement, balance sheet, cash flow statement, and statement of changes in equity are prepared.
 5. Why are financial statements important for investors?
Ans. Financial statements are crucial for investors as they provide insights into a company's financial performance and potential for growth. By analyzing financial statements, investors can evaluate the company's profitability, liquidity, and solvency. This information helps investors in making informed investment decisions, assessing the risks associated with investing in the company, and determining the fair value of the company's shares. Additionally, financial statements enable investors to compare the company's performance with industry benchmarks and competitors, aiding in investment strategies.

## Accountancy Class 12

57 videos|105 docs|68 tests

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