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Questions and Answers
If the amount of any known liability can't be determined with substantial accuracy, what should be done?
If the amount of any known liability can't be determined with substantial accuracy, what should be done?
What type of error is it when wages paid for machine installation are debited in wages accounts?
What type of error is it when wages paid for machine installation are debited in wages accounts?
Which statement is NOT true about provisions?
Which statement is NOT true about provisions?
Which of the following is NOT a cause of depreciation?
Which of the following is NOT a cause of depreciation?
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From which date is depreciation calculated?
From which date is depreciation calculated?
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Which of the following is an example of a Capital Reserve?
Which of the following is an example of a Capital Reserve?
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Which of the following capital can be called up only on winding up of a company?
Which of the following capital can be called up only on winding up of a company?
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Which technique is NOT normally used for inventory control?
Which technique is NOT normally used for inventory control?
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Which section of the Companies Act mandates the preparation of Balance Sheet in a prescribed form?
Which section of the Companies Act mandates the preparation of Balance Sheet in a prescribed form?
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Which financial statement is prepared on a specific date?
Which financial statement is prepared on a specific date?
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Which type of capital is dividend usually paid on?
Which type of capital is dividend usually paid on?
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Which of the following is NOT a method of Financial Statements Analysis?
Which of the following is NOT a method of Financial Statements Analysis?
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Where are contingent liabilities typically exhibited in financial statements?
Where are contingent liabilities typically exhibited in financial statements?
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Which reserve is specifically created for a particular purpose and is considered a charge against revenue?
Which reserve is specifically created for a particular purpose and is considered a charge against revenue?
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In the Indian Companies Act, 2013, which part specifies the requirements for preparing the balance sheet?
In the Indian Companies Act, 2013, which part specifies the requirements for preparing the balance sheet?
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Where would you typically find the profit and loss of a company disclosed in its accounts?
Where would you typically find the profit and loss of a company disclosed in its accounts?
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What type of assets would not be classified under 'Fixed Assets' in a balance sheet?
What type of assets would not be classified under 'Fixed Assets' in a balance sheet?
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An Annual Report issued by a company is primarily for which group?
An Annual Report issued by a company is primarily for which group?
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Study Notes
Types of Capital
- Uncalled Capital is the portion of capital that can be called up only on the winding up of a company.
Inventory Control Techniques
- ABC Analysis, FSN Analysis, and FSND Analysis are techniques used for inventory control.
- GOLF Analysis is not a technique used for inventory control.
Preparation of Balance Sheet
- According to Section 129 of the Companies Act, a Balance Sheet is to be prepared in the prescribed form.
Financial Statements
- A Balance Sheet is prepared on a particular date.
- Trading Account and Profit & Loss Account are not prepared on a specific date.
Objectives of Financial Statements
- The objectives of Financial Statements include showing the company's financial position and operating efficiency.
- Determining Income Tax liability is not an objective of Financial Statements.
Dividend Payment
- Dividend is usually paid on Paid-up Capital.
Financial Statements Analysis
- Ratio Analysis, Comparative Analysis, and Trend Analysis are methods of Financial Statements Analysis.
- Capitalization Method is not a method of Financial Statements Analysis.
Contingent Liability
- A Contingent Liability is shown in Financial Statements as a note to accounts.
Depreciation Rates
- Depreciation rates used by HVPNL for preparing Financial Statements are as per HERC.
Errors in Accounting
- Wages paid for machine installation debited in wages accounts is an error of commission.
Provision and Contingent Liability
- If the amount of a known liability can't be determined with substantial accuracy, a contingent liability should be created.
- If the amount of a known liability can be determined with accuracy, a provision should be created.
Characteristics of Provision
- A provision is an appropriation of Profit, a charge against profits, and is shown as a liability in the Balance Sheet.
- It is created due to uncertainty as a matter of financial prudence.
Causes of Depreciation
- Passage of time, price inflation, obsolescence, and natural wear and tear are causes of depreciation.
Calculation of Depreciation
- Depreciation is calculated from the date of assets put to use.
Capital Reserve
- Premium on issue of shares is an example of Capital Reserve.
Accounting for Loss on Sale of Assets
- Loss on sale of assets is shown in the Profit & Loss Appropriation Account.
Redeemable Debentures
- A company can issue redeemable debentures, but not debentures with voting rights.
Calculation of Total Assets
- If Equity is ₹ 90,000, Liabilities are ₹ 60,000, and Loss of the year is ₹ 20,000, then total assets will be ₹ 1,30,000.
Specific Reserve
- A reserve created for a particular purpose and which is a charge against revenue is called a Specific Reserve.
Annual Report
- An Annual Report is issued by a company to its shareholders.
Disclosure of Profit and Loss
- The profit and loss disclosed by the accounts of a company are shown under the head 'Reserves and Surplus'.
Balance Sheet Presentation
- Debit Balance of Profit & Loss Statement will be shown on the Balance Sheet under the head 'Reserves and Surplus' as a negative item.
Contingent Liabilities
- Contingent Liabilities are exhibited under the heading as a footnote.
Provision for Provident Funds
- Provision for Provident Funds is shown in the Balance Sheet under the head 'Non-current Liabilities'.
Preparation of Balance Sheet
- According to Part 1 of Schedule III of the Indian Companies Act, 2013, Indian companies have to prepare Balance Sheet.
Fixed Assets
- Investments are not shown under the head 'Fixed Assets' in the Balance Sheet.
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Description
Test your knowledge on accounting errors, liabilities, and provisions with this quiz. Answer questions about different types of accounting errors and how to handle uncertainties in determining liabilities.
