Introduction to Company Accounts

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What is the role of a promoter in the formation of a company?

A person who conceives a business idea and takes the initiative to form and register the company.

How many names can the promoter propose for the registration of the company?

Up to six names.

Who needs to sign the Memorandum of Association and Articles of Association?

Promoters.

What are the two key documents that the promoter needs to prepare for registration?

Memorandum of Association and Articles of Association. Signup and view all the answers

What type of declaration is required for the registration of a company?

A declaration by an advocate or practicing professional (CA, CS, etc.) regarding compliance. Signup and view all the answers

What are some of the details needed for the registration of a company?

Details of each subscriber, details of the first director, address for correspondence, required registration fees. Signup and view all the answers

What is the meaning of a share in a company?

Share is the smallest part of the share capital of the company. Signup and view all the answers

Who is the owner of the shares in a company?

The owner of the shares is called a shareholder. Signup and view all the answers

What is the definition of stock in a company?

Stock is a bundle of fully paid shares. Signup and view all the answers

What is the face value of a share?

Each share has a predetermined value known as the face value. Signup and view all the answers

What are the two types of shares mentioned in the text?

The two types of shares are Equity Shares and Preference Shares. Signup and view all the answers

What is the role of the Registrar of the company in relation to the Incorporation Certificate?

The Registrar of the company issues the Incorporation Certificate once all required documents are received. Signup and view all the answers

What is reserve capital?

Uncalled amount of share subscribed capital demanded at emergency or liquidation Signup and view all the answers

How is dividend classified?

As final dividend and interim dividend Signup and view all the answers

What is the key difference between final dividend and interim dividend?

Final dividend is proposed at the annual general meeting while interim dividend is declared between two annual general meetings Signup and view all the answers

How is final dividend treated in the balance sheet?

As a contingent liability until declared at the annual general meeting Signup and view all the answers

When should final dividend be paid?

In a stipulated time after declaration Signup and view all the answers

How should the balance sheet be prepared?

In vertical format along with notes to accounts Signup and view all the answers

What are the different categories of investments under 'Current Investments'?

a.Investments in Equity Instruments b.Investments in Preference Shares c.Investments in Government or Trust Securities d.Investments in Debentures or Bonds e.Investments in Mutual Funds f.Investments in Partnership Firms g.Other Investments Signup and view all the answers

List the different types of inventories mentioned in the text.

a.Raw Materials b.Work-in-progress c.Finished Goods d.Stock-in-Trade e.Stores and Spares f.Loose Tools g.Others Signup and view all the answers

What are the two categories of 'Trade Receivables' based on security?

a.Secured, Considered Good b.Unsecured, Considered Good Signup and view all the answers

What does 'Less: Provision for Bad and Doubtful Debts' represent?

Provision made for potential bad debts or doubtful debts. Signup and view all the answers

What are the components of 'Cash and Cash Equivalents'?

a.Balances with Banks b.Cheques, Drafts on Hand c.Cash on Hand d.Others (specify nature) Signup and view all the answers

Name three items listed under 'Other Current Assets'.

Non-Trade Receivables Unamortized Expenditure Unbilled Revenue Signup and view all the answers

Explain the concept of forfeiture of shares.

Forfeiture of shares refers to the cancellation of shares due to non-payment of calls by shareholders. Signup and view all the answers

What is the significance of re-issue of forfeited shares?

Re-issuing forfeited shares allows the company to recover the forfeited amount by selling those shares to new investors. Signup and view all the answers

Explain the difference between equity shares and preference shares.

Equity shares represent ownership in the company and have voting rights, while preference shares have a fixed dividend but no voting rights. Signup and view all the answers

What is the purpose of an ESCROW Account in a company?

An ESCROW Account is used to hold funds or assets temporarily while the transaction is being finalized. Signup and view all the answers

Explain the concept of Sweat Equity.

Sweat Equity refers to shares issued to employees or directors based on their performance or contribution to the company. Signup and view all the answers