CUET UG Accountancy / Book-Keeping Flashcards

24 sample cards from the Accountancy / Book-Keeping deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What is calls-in-arrears?

   The amount of allotment or call money that has been demanded by the company but not yet paid by shareholders. It is shown by deducting from called-up capital.

2. What is the maximum rate at which shares can be issued at a discount, and under which provision is sweat equity allowed?

   Under the Companies Act 2013, issuing shares at a discount is generally prohibited (Section 53), except sweat equity shares issued under Section 54.

3. How is securities premium recorded and what is one permitted use of it?

   The premium on issue of shares is credited to the Securities Premium Account (a capital reserve). It can be used to issue fully paid bonus shares, write off preliminary expenses, write off share/debenture issue expenses, or buy back shares.

4. What is pro-rata allotment of shares?

   When a company is over-subscribed, shares are allotted proportionately among applicants. The excess application money is adjusted towards allotment (and calls) or refunded.

5. What is forfeiture of shares and what happens to the amount already received?

   Forfeiture is cancellation of shares due to non-payment of calls. The amount already received is forfeited (credited to Share Forfeiture Account) and the share capital is reduced by the called-up value.

6. On re-issue of forfeited shares, what is the maximum discount that can be allowed?

   The discount on re-issue cannot exceed the amount forfeited on those shares; any balance left in the Share Forfeiture Account after re-issue is transferred to Capital Reserve.

7. What is a debenture?

   A debenture is a written acknowledgement of debt issued by a company under its seal, carrying a fixed rate of interest and usually repayable after a fixed period. Debenture holders are creditors of the company.

8. Give two key differences between a share and a debenture.

   A shareholder is an owner; a debenture holder is a creditor. Shares earn dividend (variable, out of profit); debentures earn interest (fixed, a charge against profit paid even in losses).

9. What does 'issue of debentures as collateral security' mean?

   Debentures given to lenders as additional/secondary security for a loan. No entry is required, or they may be recorded with a Debenture Suspense Account; they become enforceable only if the company defaults.

10. What is 'Loss on Issue of Debentures' and how does it arise?

    It arises when debentures are issued at a discount and/or are redeemable at a premium. The total loss (discount on issue plus premium payable on redemption) is debited to the Loss on Issue of Debentures Account.

11. How is interest on debentures treated in the company's accounts?

    It is a charge against profit (debited to Statement of Profit and Loss), paid at a fixed rate, after deducting TDS (tax deducted at source) where applicable.

12. Under Schedule III of the Companies Act 2013, what is the prescribed format of a company's Balance Sheet?

    The vertical format, with two main heads: I) Equity and Liabilities, and II) Assets, classified into Non-current and Current items.

13. Under which main heads is 'Equity and Liabilities' classified in a company's Balance Sheet (Schedule III)?

    Shareholders' Funds; Share Application Money Pending Allotment; Non-Current Liabilities; and Current Liabilities.

14. Under which sub-head of the Balance Sheet are 'Securities Premium' and 'General Reserve' shown?

    Under Reserves and Surplus, which is part of Shareholders' Funds.

15. Under which Balance Sheet head are 'Trade Payables' (creditors and bills payable) shown?

    Under Current Liabilities.

16. Name the two main financial statements of a company.

    The Statement of Profit and Loss (income statement) and the Balance Sheet (statement of financial position).

17. What are 'Tools of Financial Statement Analysis'? Name three.

    Techniques to analyse and interpret financial statements: Comparative Statements, Common-Size Statements, Ratio Analysis, Cash Flow Statement, and Trend Analysis.

18. What is a common-size statement and what is taken as 100%?

    A statement expressing each item as a percentage of a common base. In a common-size income statement, Revenue from Operations (net sales) is 100%; in a common-size balance sheet, Total Assets (or Total Equity and Liabilities) is 100%.

19. What does a Cash Flow Statement show, and into which three activities are flows classified?

    It shows inflows and outflows of cash and cash equivalents over a period, classified into Operating Activities, Investing Activities, and Financing Activities (as per AS-3).

20. Under the indirect method, what is the starting point for computing cash flow from operating activities?

    Net profit before tax and extraordinary items, which is then adjusted for non-cash and non-operating items (e.g., add depreciation) and changes in working capital.

21. Give two examples of cash flows from financing activities.

    Proceeds from issue of shares/debentures and bank loans (inflows); repayment of loans, buy-back of shares, payment of dividend, and interest on borrowings (outflows).

22. What is the difference between manual accounting and a Computerised Accounting System (CAS)?

    Manual accounting records and processes transactions by hand in books; CAS uses computer software to record, store, and process accounting data automatically, giving faster, more accurate, and easily retrievable reports.

23. In a database/spreadsheet context, what is a primary key and a query?

    A primary key is a field (or combination) that uniquely identifies each record in a table. A query is a request used to retrieve, filter, or manipulate specific data from a database based on given conditions.

24. What is meant by a 'voucher' in accounting software and name one type of accounting report generated by such software.

    A voucher is a document/screen used to record a transaction (e.g., payment, receipt, sales, purchase, journal voucher). Reports generated include Trial Balance, Day Book, Ledger, Cash/Bank Book, Profit and Loss A/c, and Balance Sheet.

What this deck covers

Accountancy / Book-Keeping flashcards FAQ