Important Questions Class 12 Accountancy Chapter 11 Financial statement analysis

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CBSE Class 12 Accountancy Important Questions Chapter 11 Financial statement analysis

QUESTIONS: 01 MARKS

  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 31st march, 2012 

    Equity and LiablitiesNote No.Rs.
    Shareholders‘ fund
    Reserve and Surplus    		 
    1    		 
    1,00,000
    Notes to Accounts:
    Reserve and Surplus
    General Reserve(1st April, 2011)3,00,000
    Less: Statement of Profit and Loss(Dr. Balance)2,00,000
    1,00,000
  1. 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-Heading
    i.Proposed dividendCurrent-LiabilitiesShort-term provision
    ii.Fixed deposit from PublicNon-current liabilitiesLong term borrowing
  2. State any two items which are shown under the head ’Investment‘ in a company balance sheet.
    Ans.
    (i) Government Securities.
    (ii) Sinking Fund Investment.
  3. 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.
  4. 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.
  1. Name two tools of Financial Analysis?
    Ans. 

    1. Comparative Financial Statements.
    2. Ratio Analysis etc.
  2. 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.
  3. Give the example of Horizontal Analysis.
    Ans. Comparative Financial Statement.
  4. What is Vertical Analysis?
    Ans: The Analysis which is made to review the financial statements of one particular year only is called Vertical Analysis.
  5. Give the example of Vertical Analysis?
    Ans. Ratio Analysis.

3 MARKS

  1. 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 provisions
    TOTAL
  1. 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
    1. Non-current investments
    2. Deferred tax assets (net)
    3. Long-term loans and advances
    4. 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
  2. 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.
  3. 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
  4. 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.

4 MARKS

  1. 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 rate    		8,00,000
    60% of sales
    10% of Gross profit
    50%    		10,00,000
    60% of sales
    10% of Gross Profit
    60%

    Ans.Comparative Income statement:

    articular2008
    amount    		2009
    amount    		Change in
    amount    		Change in
    Percentage
    Net Sales
    Less: C.O.G.S.    		8,00,000
    4,80,000    		10,00,000
    6,00,000    		2,00,000
    1,20,000    		25%
    25%
    Gross Profit
    Less: Indirect Expenses    		3,20,000
    32,000    		4,00,000
    40,000    		80,000
    8,000    		25%
    25%
    Operating Profit/ PBT
    Less: tax    		2,88,000
    1,44,000    		3,60,000
    2,16,000    		72,000
    72,000    		25%
    50%
    Profit after tax1,44,.0001,44,000———-————

    Common Size Income statement

    Particular2008
    amount    		2009
    amount    		Percentage of
    Net sales in
    P.Y.    		Percentage of
    Net sales in
    C.Y.
    Net Sales
    Less: C.O.G.S.    		8,00,000
    4,80,000    		10,00,000
    6,00,000    		100%
    60%    		100%
    60%
    Gross Profit
    Less: IndirectExpenses    		3,20,000
    32,000    		4,00,000
    40,000    		40%
    4%    		40%
    4%
    Operating Profit/ PBT
    Less: tax    		2,88,000
    1,44,000    		3,60,000
    2,16,000    		36%
    18%    		36%
    21.6%
    Profit after tax1,44,.0001,44,00018%14.4%