NCERT Solutions offer a broad variety of definitions and introduction to the topic for Class 12 Accounts, which includes all the questions provided in the NCERT books.
Class 12 Accountancy NCERT Solutions Analysis of Financial Statements is known as an extremely helpful resource for preparing for the exam. Takshila Learning provides a huge number of NCERT problems and for Financial Statements of a company class 12 and analysis of financial statements class 12 notes to its students. CBSE Class 12 Accountancy NCERT Solutions are created by subject matter experts to ensure that students are prepared for a successful grade. The CBSE guidelines were followed when creating the questions in the NCERT Books.
Analysis of financial statements class 12 NCERT solutions provides us with all-inclusive information on all concepts. Since students in class 12 must learn the fundamentals of the topic, this class 12 programme is a detailed study guide that clearly explains the concepts. At any time, you can access and use the direct links for Class 12 NCERT Solutions by Chapter. The NCERT Solutions for 12th Grade Accounts use a step-by-step approach to clarify the principles, making them easy to understand.
NCERT Solutions for Class 12 Accounts include all of the questions contained in the NCERT books, as well as a variety of meanings and introductions to the topic.
Questions Covered In Analysis of Financial Statements Class 12
Question 1 : State the meaning of financial statements?
Question 2 : What are limitations of financial statements?
Question 3 : List any three objectives of financial statements?
Question 4 : State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors
Question 5 : How will you disclose the following items in the Balance Sheet of a company:
(i) Loose Tools
(ii) Uncalled liability on partly paid-up shares
(iii) Debentures Redemption Reserve
(iv) Mastheads and publishing titles
(v) 10% debentures
(vi) Proposed dividends
(vii) Share forfeited account
(viii) Capital Redemption Reserve
(ix) Mining Rights
(x) Work-in-progress
Question 6 : Explain the nature of the financial statements.
Question 7 : Explain in detail about the significance of the financial statements.
Question 8 : Explain the limitations of financial statements.
Question 9 : Prepare the format of statement of Profit and Loss and explain its items.
Question 10 : Prepare the format of balance sheet and explain the various elements of balance sheet.
Question 11 : Explain how financial statements are useful to the various parties who are interested in the affairs of an undertaking?
Question 12 : `Financial statements reflect a combination of recorded facts, accounting conventions and personal judgments’ discuss.
Question 13 : Explain the process of preparing income statement and balance sheet.
Question 14 : Show the following items in the balance sheet as per the provisions of the Companies Act, 2013 in Schedule III:
Particulars Rs. Particulars Rs.
Preliminary Expenses 2,40,000 Good will 30,000
Discount on issue of shares 20,000 Loose tools 12,000
10% Debentures 2,00,000 Motor Vehicles 4,75,000
Stock in Trade 1,40,000 Provision for tax 16,000
Cash at bank 1,35,000
Bills receivable 1,20,000
Question 15 : On 1st Aril, 2017, Jumbo Ltd. issued 10,000; 12% debentures of Rs. 100 each a discount of 20%, redeemable after 5 years. The company decided to write-off discount on issue of such debentures over the life time of the Debentures. Show the items in the balance sheet of the company immediately after the issue of these debentures.
Question 16 : From the following information prepare the balance sheet of Gitanjali Ltd., as per the (Revised) Schedule VI:
Inventories Rs. 14,00,000; Equity Share Capital Rs. 20,00,000; Plant and Machinery Rs. 10,00,000; Preference Share Capital Rs. 12,00,000; Debenture Redemption Reserve Rs. 6,00,000; Outstanding Expenses Rs. 3,00,000; Proposed Dividend Rs. 5,00,000; Land and Building Rs. 20,00,000; Current Investments Rs. 8,00,000; Cash Equivalent Rs. 10,00,000; Short term loan from Zaveri Ltd. (A Subsidiary Company of Twilight Ltd.) Rs. 4,00,000; Public Deposits Rs. 12,00,000.
Question 17 : From the following information prepare the balance sheet of Jam Ltd. as per the (revised) Schedule VI:
Inventories Rs. 7,00,000; Equity Share Capital Rs. 16,00,000; Plant and Machinery Rs. 8,00,000; Preference Share Capital Rs. 6,00,000; General Reserves Rs. 6,00,000; Bills payable Rs. 1,50,000; Provision for taxation Rs. 2,50,000; Land and Building Rs. 16,00,000; Noncurrent Investments Rs. 10,00,000; Cash at Bank Rs. 5,00,000;Creditors Rs. 2,00,000; 12% Debentures Rs. 12,00,000.
Question 18 : Prepare the balance sheet of Jyoti Ltd. as at March 31, 2017 from the following information:
Building Rs. 10,00,000; Investments in the shares of Metro Tyers Rs. 3,00,000; Stores & Spares Rs. 1,00,000; Discount on issue of 10% debentures Rs. 10,000; Statement of Profit and Loss (Dr.) Rs. 90,000; 5,00,000 Equity Shares of Rs. 20 each fully paid-up; Capital Redemption Reserve Rs. 1,00,000; 10% Debentures Rs. 3,00,000; Unpaid dividends Rs. 90,000; Share options outstanding account Rs. 10,000.
Question 19 : Brinda Ltd. has furnished the following information:
(a) 25,000, 10% debentures of Rs. 100 each;
(b) Bank Loan of Rs. 10,00,000 repayable after 5 years;
(c) Interest on debentures is yet to be paid.
Show the above items in the balance sheet of the company as at March 31, 2017.
Question 20 : Prepare a balance sheet of Black Swan Ltd., as at March 31, 2017 form the following information:
General Reserve : 3,000
10% Debentures : 3,000
Statement of Profit & Loss : 1,200
Depreciation on fixed assets : 700
Gross Block : 9,000
Current Liabilities : 2,500
Preliminary Expenses : 300
6% Preference Share Capital : 5,000
Cash & Cash Equivalents : 6,100
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Questions Ans Answers For NCERT Solutions For Class 12 Accountancy Chapter 9 Analysis of Financial Statements
1) List the techniques of Financial Statement Analysis.
Answer: Most commonly used techniques are:
- Common Size Financial Statements
- Trend Analysis
- Comparative Financial Statements
- Cash Flow Statement
- Fund Flow Statement
- Ratio Analysis
2) Distinguish between Vertical and Horizontal Analysis of financial data.
| Basis of Comparison | Horizontal Analysis | Vertical Analysis |
| Meaning | It is the process of estimating relative and absolute variances for each line item in a financial statement for two or more periods. | It is the study of financial data that is independent of time and things relating to a company’s financial information and its effect on its results. |
| Purpose | To describe the differences in financial results between two accounting periods that is equivalent. | A financial item is compared as a percentage of a base number. |
| Comparison of | Intra-firm comparison | Both intra and inter firm comparison |
| Usefulness | An item’s growth or decline is depicted here. | Is useful for estimating and calculating the relative proportion of a financial statement item to a typical financial statement item. |
3) State the meaning of Analysis and Interpretation.
Answer: It is a thorough and methodical analysis of the financial statement. It presents financial data in a logical order and creates a cause-and-effect relationship between all financial statement elements. The aim of analysis and interpretation is to present financial data that is self-explanatory and simple to comprehend. It aids consumers of accounting data in evaluating the financial performance of a company over time and allowing them to make informed decisions about the firm’s finance policies.
4) State the importance of Financial Analysis?
Answer: Financial analysis is of considerable significance for the different consumers of accounting information. Financial statements such as Balance Sheets, Income sheets and other forms of financial data provide ample information on the different expenditures and sources of profit, loss and income which is helpful in assessing the financial position of a company. Financial data is useless unless and until it is analysed. There are a variety of approaches for analysing financial statements and making them useful to a variety of accounting consumers.
Following reasons are essential for performing financial analysis:
- It is very useful in determining the financial viability and profit earning capacity of the firm.
- It is useful in evaluating the business solvency in the long term
- It is useful in comparing the financial status of a firm in comparison to other competitor firms
- It helps management in decision making, drafting plan and also establish a robust and effective control mechanism
5) What are Comparative Financial Statements?
Answer: Financial statements that allow intra- and inter-firm comparisons over time are referred to as comparative financial statements. These statements assist different consumers of accounting data in measuring a company’s financial success in relative terms. These statements express the data in absolute figures or as a percentage change or absolute change in the item. The data presented in financial statements are self-explanatory and easy to understand. When items of the financial statement are treated with the same accounting policies and practices over a fixed period of time, then the comparative data derived from such statements bear meaningful comparisons.
Two common types are:
- Comparative Income Statement
- Comparative Balance Sheet
6) What do you mean by Common Size Statements?
Answer: Sizes that are commonly used Statements are those in which the elements are represented as percentages of a particular base figure rather than absolute values. It’s useful for comparing firms (inter-firm comparison) or different time periods within the same business (intra-firm comparison). The relationship between financial statement items and common items like balance is seen in these statements.
Two types are:
- Common Size Income Statements
- Common Size Balance Sheet
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