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Questions and Answers
What is the purpose of financial statements for a company?
What is the purpose of financial statements for a company?
To provide true and fair information about the financial performance and position of a company.
What are the two main financial statements discussed in this chapter?
What are the two main financial statements discussed in this chapter?
Balance sheet and statement of profit and loss.
The balance sheet of a company shows the company's __________ and liabilities.
The balance sheet of a company shows the company's __________ and liabilities.
assets
Which of the following is not a part of current liabilities?
Which of the following is not a part of current liabilities?
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Which items fall under Non-current assets? (Select all that apply)
Which items fall under Non-current assets? (Select all that apply)
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The 'Statement of Profit and Loss' indicates a company's revenue and expenses.
The 'Statement of Profit and Loss' indicates a company's revenue and expenses.
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Match the following components with their respective categories:
Match the following components with their respective categories:
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What are 'Reserve and Surplus' classified as in the balance sheet?
What are 'Reserve and Surplus' classified as in the balance sheet?
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Study Notes
Company Final Accounts Introduction
- Industrial revolution led to increased business types and company forms.
- Company formation became necessary due to limitations in proprietorship and partnership firms.
- Various parties (shareholders, directors, creditors, investors) are involved with a company.
- Company financial statements are crucial to understand company performance and position.
- These statements are prepared according to the Companies Act.
Balance Sheet Specimen
-
Equity and Liabilities:
-
Shareholders' funds:
- Share capital
- Reserve and Surplus
-
Non-current liabilities:
- Long-term borrowings
- Other long-term liabilities
- Long-term provisions
-
Current liabilities:
- Short-term borrowings
- Trade payables
- Other current liabilities
- Short-term provisions
-
Shareholders' funds:
- Total
-
Assets:
-
Non-current assets:
- Fixed assets (tangible, intangible)
- Non-current investments
- Long-term loans and advances
- Other non-current assets
-
Current assets:
- Current investments
- Inventories
- Trade receivables
- Cash and cash equivalents
- Short-term loans and advances
- Other current assets
-
Non-current assets:
- Total
Statement of Profit and Loss Specimen
- Revenue from operations (Sales)
- Other income (Interest, Dividend, Profit on Asset Sales)
- Total Revenue
-
Expenses:
- Purchases/Cost of Goods Sold
- Changes in stock
- Direct expenses (like wages, freight)
- Employee benefits (salary, provident fund contributions)
- Financing Costs (interest on loans or bonds)
- Depreciation and amortization
- Other expenses (administrative and office)
- Total Expenses
- Profit before tax
- Provision for tax
- Profit after tax
Company Classification
-
Equity and Liabilities:
- Shareholders' fund: (Share Capital, Reserves and Surplus)
- Non-current liabilities: (Long-term borrowings, other long-term liabilities, long terms provisions)
- Current liabilities: (Short-term borrowings, Trade payables, other current liabilities, short term provisions)
-
Assets:
- Non-current assets: (Fixed assets, non-current investments, long-term loans and advances, other non-current assets)
- Current assets: (Current investments, Inventories, Trade receivables, Cash and cash equivalents, short-term loans and advances, other current assets)
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Description
Explore the critical aspects of company final accounts, including the importance of financial statements as mandated by the Companies Act. Understand the structure of a balance sheet, detailing equity, liabilities, and assets. This quiz will help reinforce your knowledge of how companies report their financial position.
