Download App

Financial Statements of a Company — Accountancy STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceAccountancyFinancial Statements of a Company3 Marks
Question
Operating Cycle and the period when payment is received is given below. How will you classify the asset?
Particulars
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Operating Cycle (Months)
10
10
10
15
15
20
Expected Period when payment is received (Months)
9
12
14
14
18
18
✓

Answer

  1. An asset, of which the payment is to be received within 12 months from the Balance sheet date, shall be treated as current. Period of operating cycle is irrelevant in such cases. Hence, assets in case of (i) and (ii) shall be treated as current assets.
  2. Assets, the payment of which is received in more than 12 months from the Balance Sheet date:
  1. If payment period is less than the period of operating cycle, the assets shall be treated as Current Asset. Hence, assets in case of (iv) and (vi) shall be treated as current Assets.
  2. If payment period is more than the period of operating cycle, the assets shall be treated as Non-Current assets. Hence, Assets in case of (iii) and (v) shall be treated as Non-current Assets.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "3 Marks Question" from Financial Statements of a Company→Financial Statements of a Company — all question types→Accountancy STD 12 Commerce question papers→CBSE Board STD 12 Commerce question papers→CBSE Board question paper generator→

Similar questions

Capital Employed ₹ 12,00,000; Net Fixed Assets ₹ 8,00,000; Cost of Goods Sold or Cost of Revenue from Operations ₹ 40,00,000; Gross Profit is 20% on Cost. Calculate Working Capital Turnover Ratio.
[Hint: Working Capital = Capital Employed - Net Fixed Assets.]
→
Can a company purchase its own debentures in the open market? Explain.
→
Explain the usefulness of trend percentages in interpretation of financial performance of a company.
→
From the following information, calculate Change in inventory of Stock-in-Trade:
Opening and Closing Stock-in-Trade ₹ 5,00,000 and ₹ 4,00,000 respectively.
→
Revenue from Operations, Cash Sales ₹ 4,00,000; Credit Sales ₹ 1,00,000; Gross Profit ₹ 1,00,000 Office and Selling Expenses ₹ 50,000. Calculate Operating Ratio.
→
Current Assets ₹ 5,00,000; Working Capital ₹ 3,00,000. Calculate Current Ratio.
→
G Ltd. has 800 lakhs, 10% debentures of ₹ 100 each due for redemption on March 31, 2003. Assume that Debenture Redemption Reserve has a balance of ₹ 3,40,00,00,000 on that date. Record necessary entries at the time of redemption of debenture.
→
X Ltd. purchased machinery for Rs. 5,50,000 from Y Ltd. Rs. 55,000 were paid by X Ltd. in cash and the balance was paid by issue of 9% debentures of Rs. 1,000 each at 10% premium redeemable after three years. Pass necessary journal entries in the books of the company.
→
X Ltd. obtained a loan of ₹ 4,00,000 from IDBI Bank. The company issued 5000, 9% Debentures of ₹ 100 each as a collateral security for the same. Show how these items will be presented in the Balance Sheet of the company.
→
Current Ratio 2.4; Current Assets ₹ 1,81, 10,400 Inventories ₹ 79,23,300. Calculate the Liquid Ratio.
→