Financial statements are prepared following the consistent accounting concepts, principles, procedures and also the legal environment in which the business organisations operate. These statements are the sources of information on the basis of which conclusions are drawn about the profitability and financial position of a company so that their users can easily understand and use them in their economic decisions in a meaningful way.
From the above statement identify any two values that a company should observe while preparing its financial statements. Also, state under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013.
(I) Capital Reserve
(ii) Calls-in-Advance
(iii) Loose Tools
(iv) Bank Overdraft

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Solution

Values that a company must observe while preparing its financial statements.
(a) The financial statements must be drawn following the accounting concepts, principles, procedures
(b) The financial statements must be drawn following the ethical and legal framework
Item Major Head Sub-Head
Capital Reserve Shareholders' Funds Reserves & Surplus
Calls-in-Advance Current Liabilities Other Current Liabilities
Loose Tools Current Assets Inventories
Bank Overdraft Current Liabilities Short Term Borrowings

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M K Limited is a computer hardware manufacturing company. While preparing its accounting records it takes into consideration the various accounting principles and maintains transparency. At the end of the accounting year, the company follows the 'Companies Act and Rules, 2013' for the preparation of its Financial Statements. It also prepares its Income Statement and Balance Sheet as per the format provided in Schedule III to the Act. Its Financial Statements depict its true & fair financial position. For the financial year ending March 31, 2017, the accountant of the company is not certain about the presentation of the following items under relevant Major Heads and Sub Heads, if any, in its Balance Sheet:

(i) Securities Premium Reserve

(ii) Calls in Advance

(iii) Stores and Spares

(a) Advise the accountant of the company under which Major Heads and Sub Heads, if any, he should present the above items in the Balance Sheet of the company,

(b) List any two values that the company is observing in the maintenance of its accounting records and preparation of its financial statements.

Q. State under which major headings and sub-headings the following items will be presented in the Balance Sheet of a company as per Schedule III of the Companies Act, 2013:
(i) Capital Reserve;
(ii) Calls-in-Advance;
(iii) Loose Tools; and
(iv) Bank overdraft.

Q. Under which major headings and sub-headings the following items will be shown in the Balance Sheet of a company as per schedule III of Companies Act, 2013?
(i) Provision for Employee Benefits.
(ii) Calls-in-Advance.

Under which major heading and sub-heading will the following items be presented in the Balance Sheet of a company as per the Schedule III of the Companies Act, 2013.

(i) Copyrights

(ii) Cheques

(iii) Capital Redemption Reserve

(iv) Stock of Finished Goods

Under which major head and sub-heads does the following items be placed in the Balance Sheet of a company as per Schedule III, Part I of the Companies Act, 2013.

(i) Cash credit.

(ii) 10 years loan obtained from Financial Institutions.

(iii) Debenture Sinking Fund.

(iv) Matured Debentures.

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Item	Major Head	Sub-Head
Capital Reserve	Shareholders' Funds	Reserves & Surplus
Calls-in-Advance	Current Liabilities	Other Current Liabilities
Loose Tools	Current Assets	Inventories
Bank Overdraft	Current Liabilities	Short Term Borrowings