Question : Which of the following statements is false?
Option 1: Long Term Debts = Debentures + Mortgage Loan
Option 2: Shareholder’s Funds = Equity Share Capital + Pref. Share Capital + Capital Reserve + P&L Balance+ long-term debt
Option 3: Total Assets = Non-Current Assets + Current Assets
Option 4: None of the above
Correct Answer: Shareholder’s Funds = Equity Share Capital + Pref. Share Capital + Capital Reserve + P&L Balance+ long-term debt
Solution : Answer = Shareholder’s Funds = Equity Share Capital + Pref. Share Capital + Capital Reserve + P&L Balance+ long-term debt
The correct formula for Shareholder’s Funds typically does not include long-term debt. Instead, it usually comprises Equity Share Capital, Preference Share Capital, Capital Reserve, and Retained Earnings (which includes Profit & Loss Balance).
Other statements are true
Share Holder fund + Total Debt = Non-Current Assets + Current Assets.
Share Holder fund = Share Capital + Reserve and Surplus.
Hence, the correct option is 2.
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