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CMA Intermediate · Corporate Accounting and Auditing · Statement of Profit and Loss and Balance Sheet (Schedule III of Companies Act, 2013)

At the reporting date, Zenith Ltd has: equity share capital Rs 500 lakh, securities premium Rs 120 lakh, general reserve Rs 80 lakh, retained earnings Rs 150 lakh, proposed dividend (not declared before year end) Rs 50 lakh, and money received against share warrants Rs 30 lakh. What is the total shown under the head 'Equity'?

Total equity is Rs 880 lakh, being share capital 500, securities premium 120, general reserve 80, retained earnings 150 and share warrant money 30. The undeclared proposed dividend is neither a liability nor an equity addition, so it is ignored in this total.

  1. ARs 880 lakhCorrect
  2. BRs 930 lakh
  3. CRs 850 lakh
  4. DRs 800 lakh

Explanation

Equity = 500 + 120 + 80 + 150 + 30 = Rs 880 lakh. The proposed dividend not declared before the year end is not a liability and is not deducted, so Rs 830 lakh is wrong. Adding it would give Rs 930 lakh, which is also wrong because it is not a separate equity item.

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