CA Inter P1 · Chapter 9 · Question 4 of 10
Case: Bhumi Paints Ltd has a General Reserve of ₹6,00,000 and a debit balance of ₹9,00,000 in the Statement of Profit and Loss. As per Schedule III, the debit balance should be:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Shown as a negative figure under 'Surplus' in Reserves and Surplus, even if the total of Reserves and Surplus becomes negative
Explanation
Schedule III requires a debit balance of the statement of profit and loss to be shown as a negative figure under the head 'Surplus'. The aggregate of Reserves and Surplus is shown after this adjustment even if the resulting figure is negative (here 6,00,000 - 9,00,000 = negative 3,00,000). It cannot be presented as an asset.
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