NCERT MOST IMPORTANT QUESTIONS CLASS – 12 | ACCOUNTANCY PART 1 IMPORTANT QUESTIONS | CHAPTER – 4 | ANALYSIS OF FINANCIAL STATEMENT | EDUGROWN |

In This Post we are  providing Chapter- 4 ANALYSIS OF FINANCIAL STATEMENT NCERT MOST IMPORTANT QUESTIONS for Class 12 ACCOUNTANCY which will be beneficial for students. These solutions are updated according to 2021-22 syllabus. These MCQS  can be really helpful in the preparation of Board exams and will provide you with a brief knowledge of the chapter

NCERT MOST IMPORTANT QUESTIONS ON ANALYSIS OF FINANCIAL STATEMENT

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1. How would you show the following two items in a company‘s Balance Sheet as at 31st March, 2012 as per the requirement of Schedule VI:
   General Reserve (Since 31st March, 2011) Rs. 3,00,000, Statement of Profit and Loss (Debit Balance) for 2011-12 Rs. 2,00,000.Ans.
   Balance Sheet
   As at 31^st march, 2012 Equity and LiablitiesNote No.Rs.Shareholders‘ fund
   Reserve and Surplus 
   1 
   1,00,000Notes to Accounts:Reserve and SurplusGeneral Reserve(1st April, 2011)3,00,000Less: Statement of Profit and Loss(Dr. Balance)2,00,0001,00,000

2. Under Which main headings and sub-headings of Equity and Liabilities of the balance sheet as per the Revised Schedule VI of a company will you classify the following items:
   1. Proposed dividend.
   2. Fixed Deposit from Public
   Ans.Sr. No.ItemsMain-HeadingSub-Headingi.Proposed dividendCurrent-LiabilitiesShort-term provisionii.Fixed deposit from PublicNon-current liabilitiesLong term borrowing
3. State any two items which are shown under the head ’Investment‘ in a company balance sheet.
   Ans.
   (i) Government Securities.
   (ii) Sinking Fund Investment.
4. How is analysis of Financial statements suffered from the limitation of window dressing?
   Ans. Analysis of financial statements is affected from the limitation of window dressing as companies hide Some vital information or show items at incorrect value to portray better profitability and financial Position of the business, for example the company may overvalue closing stock to show higher profits.
5. What is the interest of Shareholders in the analysis of Financial Statements?
   Ans.
   (i) They want to judge the present and future earning capacity of the business.
   (ii) They want to judge the safety of their investment.

6. Name two tools of Financial Analysis?
   Ans. 
   1. Comparative Financial Statements.
   2. Ratio Analysis etc.
7. What is Horizontal Analysis?
   Ans: The analysis which is made to review and compare the financial statements of two or more then two Years is called Horizontal Analysis.
8. Give the example of Horizontal Analysis.
   Ans. Comparative Financial Statement.

9 Give the Main Heading and Sub- Heading of Equity and Liabilities of the Balance sheet of a company as per the Revised Schedule VI of the companies Act.1956.Ans.
2. EQUITY AND LIABILITIES
(5) Shareholders’ Funds
(d) Share Capital
(e) Reserves and Surplus
(f) Money received against share warrants
(6) Share Applications Money Pending Allotment
(7) Non-Current Liabilities
(e) Long-term borrowings
(f) Deferred tax liabilities(Net)
(g) Other Long-term Liabilities
(h) Long-term provisions
(8) Current Liabilities
(e) Short-term borrowings
(f) Trade payables
(g) Other current liabilities
(h) Short-term provisionsTOTAL

2. Give the Main Heading and Sub- Heading of Assets of the Balance sheet of a company as per the Revised Schedule VI of the companies Act.1956.
   Ans. ASSETS
   (1) Non-Current Assets
   (a) Fixed Assets 
   1. Tangible Assets
   2. Intangible assets
   3. Capital work-in progress
   4. Intangible assets under development
   2. Non-current investments
   3. Deferred tax assets (net)
   4. Long-term loans and advances
   5. Other non-current assets(2) Current Assets
   1. Current investments
   2. Inventories
   3. Trade receivables
   4. Cash and cash equivalents
   5. Short-term loans and advances
   6. Other current assets
3. Rearrange the following items under assets according to Revised or New Schedule VI:Ans.
   1. Livestock
   2. Loose Tools.
   3. Goodwill
   4. Trademarks
   5. Bills Receivable
   6. Debtors
   7. Land
   8. Leasehold
   9. Stock-in-Trade
   10. Stores and Spare Parts
   11. Vehicles
   12. Cash at Bank
   13. Work in Progress(Machinery)
   14. Interest accrued on Investment
   15. Furniture
   16. Advance to Subsidiaries
   17. Cash in Hand
   18. Plant
   19. Deposits with electricity supply company.
   20. Fixed Assets(Tangible): Livestock, Land, Leasehold, furniture, vehicles and plant
   21. Capital Work-in-progress: Work in progress(Machinery)
   22. Fixed Assets(Intangible): Goodwill and Trademarks
   23. Inventories: Loose Tools, Stock-in-Trade, Stores and Spare Parts.
   24. Trade Receivables: Bill Receivables, Debtors
   25. Cash and Cash Equivalents: Cash at Bank, Cash in Hand
   26. Long term Loans and Advances: Advance to Subsidiaries, Deposits with Electricity Supply Company.
   27. Other Current Assets: Interest Accrued on Investments.
4. List any three items that can be shown as contingent Liabilities in a company‘s Balance sheet.Ans:
   1. Claims against the Company not acknowledged as debts.
   2. Uncalled Liability on partly paid shares.
   3. Arrears of Dividend on Cumulative preference shares.108
5. How is a Company‘s balance sheet different from that of a Partnership firm? Give Two point only
   Ans. 
   1. For company‘s Balance Sheet there are two standard forms prescribed
      under the companies Act.1956 .Whereas, there is no standard form prescribed under the Indian partnership Act,1932 for a partnership Firms balance sheet.
   2. In case of a company‘s Balance sheet previous year‘s figures are required to be given whereas it is not so in the case of a partnership firms balance sheet.

10 Prepare Comparative and Common Size income statement from the following information for the year‘s ended march 31, 2008 and 2009.
Particulars2008(Rs.)2009(Rs.)1.Net Sales
2.Cost of Goods Sold
3.Indirect Expenses
4.Income Tax rate8,00,000
60% of sales
10% of Gross profit
50%10,00,000
60% of sales
10% of Gross Profit
60%Ans.Comparative Income statement:articular2008
amount2009
amountChange in
amountChange in
PercentageNet Sales
Less: C.O.G.S.8,00,000
4,80,00010,00,000
6,00,0002,00,000
1,20,00025%
25%Gross Profit
Less: Indirect Expenses3,20,000
32,0004,00,000
40,00080,000
8,00025%
25%Operating Profit/ PBT
Less: tax2,88,000
1,44,0003,60,000
2,16,00072,000
72,00025%
50%Profit after tax1,44,.0001,44,000———-————Common Size Income statementParticular2008
amount2009
amountPercentage of
Net sales in
P.Y.Percentage of
Net sales in
C.Y.Net Sales
Less: C.O.G.S.8,00,000
4,80,00010,00,000
6,00,000100%
60%100%
60%Gross Profit
Less: IndirectExpenses3,20,000
32,0004,00,000
40,00040%
4%40%
4%Operating Profit/ PBT
Less: tax2,88,000
1,44,0003,60,000
2,16,00036%
18%36%
21.6%Profit after tax1,44,.0001,44,00018%14.4%