Income & Expenses
A company earns ₹50,000 as commission from another party. Under which Main Head will it be presented?
Other Income
A company has ₹5 lakh outstanding to suppliers for goods purchased on credit. Identify the Main Head and Sub-head.
Current Liabilities → Trade Payables.
A company has ₹10 lakh of share capital. Under which Main Head will it be shown?
Shareholders’ Funds → Share Capital.
A company owns furniture worth ₹4 lakh used in its office. Identify its Main Head and Sub-head.
Non-current Assets → Tangible Assets.
A company has the following items:
• Provision for taxation – ₹3 lakh
• Advance tax paid – ₹2 lakh
• Interest accrued and due on borrowings – ₹80,000 • Interest accrued but not due on borrowings – ₹50,000
Classify each item under the appropriate Main Head and Sub-head.
Provision for taxation → Current Liabilities → Short-term Provisions.
Advance tax → Current Assets → Short-term Loans and Advances.
Interest accrued and due → Current Liabilities → Other Current Liabilities.
Interest accrued but not due → Classified according to the applicable liability presentation and the due period.
A company has ₹40,000 as discount allowed to customers. Under which Main Head is it classified?
Other Expenses
A company has ₹3 lakh of debentures repayable after 5 years. Identify its Main Head and Sub-head.
Non-current Liabilities → Long-term Borrowings.
A company has ₹2 lakh of securities premium. Under which Main Head and Sub-head will it appear?
Shareholders’ Funds → Reserves and Surplus
A company owns computer software used in its business. Under which Main Head and Sub-head is it classified?
Non-current Assets → Intangible Assets.
A company has ₹8 lakh of debentures, of which ₹3 lakh is repayable within the next 12 months. It also has ₹40,000 interest accrued but not due on the debentures. How should each item be classified, considering both the nature and timing of the liability?
Debentures repayable after 12 months → Non-current Liabilities → Long-term Borrowings. Debentures repayable within 12 months → Current Liabilities → Current Borrowings/appropriate current liability classification.
Interest accrued but not due → Classified according to the applicable liability presentation and disclosure requirements.
A company pays ₹20,000 as interest on a bank overdraft. Under which Main Head is it reported?
Finance Costs.
A company has ₹2 lakh of advances received from customers for a long-term contract. Where will it be classified?
Non-current Liabilities → Other Long-term Liabilities.
A company has ₹1 lakh of calls-in-arrears. How will this item be presented?
Shareholders’ Funds → Subscribed Capital, shown by way of deduction.
A company has ₹75,000 of interest accrued on investments. Where will it appear?
Current Assets → Other Current Assets.
A company reports the following:
• Securities Premium – ₹4 lakh
• Capital Reserve – ₹2 lakh
• Debenture Redemption Reserve – ₹3 lakh
• Surplus in Statement of Profit & Loss – ₹5 lakh
• Debit balance in Statement of Profit & Loss from accumulated losses – ₹1 lakh
Which of these belong to “Reserves and Surplus”, and how should the debit balance affect the presentation?
All the listed reserve/surplus items belong under Shareholders’ Funds → Reserves and Surplus.
The debit balance/accumulated loss is deducted and shown as a negative amount.
A company incurs ₹1,00,000 as selling expenses and ₹50,000 as advertising expenses. Under which Main Head are both classified?
Other Expenses
– A company has ₹80,000 interest accrued and due on secured loans. Identify BOTH the Main Head and Sub-head.
Current Liabilities → Other Current Liabilities.
A company receives ₹2 lakh as calls-in-advance. Under which Main Head and Sub-head will it appear?
Current Liabilities → Other Current Liabilities.
A company has ₹6 lakh of capital advances given for the purchase of a long-term asset. Identify the Main Head and Sub-head.
Non-current Assets → Long-term Loans and Advances.
A company has:
• Trade receivables – ₹6 lakh
• Interest accrued on investments – ₹75,000
• Capital advances – ₹4 lakh
• Advance tax – ₹1.5 lakh
• Prepaid expenses – ₹50,000
Identify the Main Head and Sub-head for EACH item and explain why capital advances are treated differently from the other advances.
Trade receivables → Current Assets → Trade Receivables.
Interest accrued on investments → Current Assets → Other Current Assets.
Capital advances → Non-current Assets → Long-term Loans and Advances.
Advance tax → Current Assets → Short-term Loans and Advances.
Prepaid expenses → Current Assets → Other Current Assets.
Capital advances are connected with acquisition of long-term assets, so they are classified as non-current.
A company earns commission received but also incurs commission paid. Under which different Main Heads will these two items be classified?
Commission received → Other Income. Commission paid → Other Expenses
A company has debentures of ₹10 lakh and interest accrued but not due of ₹50,000. Explain the classification of both items.
Debentures → Non-current Liabilities → Long-term Borrowings. Interest accrued but not due → Contingent Liability, shown as a footnote.
A company has ₹5 lakh of capital reserve and ₹3 lakh of Debenture Redemption Reserve. Are both classified under the same Main Head and Sub-head?
Yes. Both are classified under Shareholders’ Funds → Reserves and Surplus.
A company has trade debtors of ₹5 lakh and interest accrued on investments of ₹1 lakh. Under which different Sub-heads will they be classified?
Trade debtors → Current Assets → Trade Receivables. Interest accrued on investments → Current Assets → Other Current Assets.
A company has the following 8 items:
1. Debentures repayable after 4 years – ₹12 lakh
2. Debentures repayable within 6 months – ₹3 lakh 3. Interest accrued and due on borrowings – ₹60,000
4. Interest accrued but not due – ₹45,000
5. Calls-in-arrears – ₹80,000
6. Debenture Redemption Reserve – ₹2 lakh
Classify ALL 8 items under their appropriate Main Head and Sub-head, and identify which items belong to Shareholders’ Funds and which belong to Liabilities.
1. Debentures repayable after 4 years → Non-current Liabilities → Long-term Borrowings.
2. Debentures repayable within 6 months → Current Liabilities → Current Borrowings/appropriate current liability classification.
3. Interest accrued and due → Current Liabilities → Other Current Liabilities.
4. Interest accrued but not due → Classified according to the applicable liability presentation and due period.
5. Calls-in-arrears → Shareholders’ Funds → Subscribed Capital, shown by way of deduction.
6. Debenture Redemption Reserve → Shareholders’ Funds → Reserves and Surplus.