Question

Mudra Ltd. is in the process of preparing its Balance Sheet as per Schedule III, Part I of the Companies Act, 2013 and provides its true and fair view of the financial position.

(a) Under which head and sub-head will the company show ‘Stores and Spares’ in its Balance Sheet?

(b) What is the accounting treatment of ‘Stores and Spares’ when the Company will calculate its Inventory Turnover Ratio?

(c) The management of Mudra Ltd. want to analyse its Financial Statements. State any two objectives of such analysis.

(d) Identify the value being followed by Mudra Ltd.

Answer 1

(a) Head: Current Assets Sub head ; Inventories

(b) While calculating Inventory Turnover Ratio it is not included in Inventories

(c) Objectives - Assessing the ability of the enterprise to meet its short term and long term commitments, Assessing the earning capacity of the enterprise

(d) Values: Transparency, Honesty, Abiding by law