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# NCERT solutions for Class 12 Accountancy chapter 4 - Analysis of Financial Statements

## Chapter 4: Analysis of Financial Statements

#### NCERT solutions for Class 12 Accountancy Chapter 4 Exercise Short Answer Questions [Page 184]

Short Answer Questions | Q 1 | Page 184

List the techniques of Financial Statement Analysis.

Short Answer Questions | Q 2 | Page 184

Distinguish between Vertical and Horizontal Analysis of financial data.

Short Answer Questions | Q 3 | Page 184

State the meaning of Analysis and Interpretation.

Short Answer Questions | Q 4 | Page 184

State the importance of Financial Analysis?

Short Answer Questions | Q 5 | Page 184

What are Comparative Financial Statements?

Short Answer Questions | Q 6 | Page 184

What do you mean by Common Size Statements?

#### NCERT solutions for Class 12 Accountancy Chapter 4 Exercise Long Answer Questions [Page 184]

Long Answer Questions | Q 1 | Page 184

Describe the different techniques of financial analysis and explain the limitations of financial analysis.

Long Answer Questions | Q 2 | Page 184

Explain the usefulness of trend percentages in interpretation of financial performance of a company.

Long Answer Questions | Q 3 | Page 184

What is the importance of comparative statements? Illustrate your answer with particular reference to comparative income statement.

Long Answer Questions | Q 4 | Page 184

What do you understand by analysis and interpretation of financial statements? Discuss its importance.

Long Answer Questions | Q 5 | Page 184

Explain how common size statements are prepared giving an example.

#### NCERT solutions for Class 12 Accountancy Chapter 4 Exercise Numerical Questions [Pages 184 - 187]

Numerical Questions | Q 1 | Page 184

Following are the balance sheets of Alpha Ltd. as at March 31st, 2016 and 2017:

Following are the balance sheets of Alpha Ltd. as at March 31st, 2016 and 2017:

 Particulars 2016Rs. 2017Rs. I. Equity and Liabilities Equity share capital 2,00,000 4,00,000 Reserves and surplus 1,00,000 1,50,000 Long-term borrowings 2,00,000 3,00,000 Short-term borrowings 50,000 70,000 Trade payables 30,000 60,000 Short-term provisions 20,000 10,000 Other current liabilities 20,000 30,000 Total 6,20,000 10,20,000 II. Assets Fixed assets 2,00,000 5,00,000 Non-current investments 1,00,000 1,25,000 Current investments 60,000 80,000 Inventories 1,35,000 1,55,000 Trade receivables 60,000 90,000 Short term loans and advances 40,000 60,000 Cash at bank 25,000 10,000 Total 6,20,000 10,20,000

You are required to prepare a Comparative Balance Sheet.

Numerical Questions | Q 2 | Page 185

Following are the balance sheets of Beta Ltd. at March 31st, 2016 and 2017:

 Particulars 2017Rs. 2016Rs. I. Equity and Liabilities Equity share capital 4,00,000 3,00,000 Reserves and surplus 1,50,000 1,00,000 Loan from IDBI 3,00,000 1,00,000 Short-term borrowings 70,000 50,000 Trade payables 60,000 30,000 Short-term provisions 10,000 20,000 Other current liabilities 1,10,000 1,00,000 Total 11,00,000 7,00,000 II. Assets Fixed assets 4,00,000 2,20,000 Non-current investments 2,25,000 1,00,000 Current investments 80,000 60,000 Stock 1,05,000 90,000 Trade receivables 90,000 60,000 Short term loans and advances 1,00,000 85,000 Cash and cash equivalents 1,00,000 85,000 Total 11,00,000 7,00,000

You are required to prepare a Comparative Balance Sheet.

Numerical Questions | Q 3 | Page 185

Prepare Comparative Income Statement from the following information:

 Particulars 2016-17Rs. 2015-16Rs. Freight Outward 20,000 10,000 Wages (office) 10,000 5,000 Manufacturing Expenses 50,000 20,000 Stock adjustment (60,000) 30,000 Cash purchases 80,000 60,000 Credit purchases 60,000 20,000 Returns inward 8,000 4,000 Gross profit (30,000) 90,000 Carriage outward 20,000 10,000 Machinery 3,00,000 2,00,000 Charge 10% depreciation on machinery 10,000 5,000 Interest on short-term loans 20,000 20,000 10% debentures 20,000 10,000 Profit on sale of furniture 20,000 10,000 Loss on sale of office car 90,000 60,000 Tax rate 40% 50%
Numerical Questions | Q 4 | Page 186

Prepare Comparative Income Statement from the following information:

 Particulars 2015-16Rs. 2016-17Rs. Manufacturing expenses 35,000 80,000 Opening stock 30,000 60% of closing stock Sales 9,60,000 4,50,000 Returns outward 4,000 (out of credit purchase) 6,000 (out of cash purchase) Closing stock 150% of opening stock 1,00,000 Credit purchases 1,50,000 150% of cash purchase Cash purchases 80% of credit purchases 40,000 Carriage outward 10,000 30,000 Building 1,00,000 2,00,000 Depreciation on building 20% 10% Interest on bank overdraft 5,000 - 10% debentures 2,00,000 20,00,000* Profit on sale of copyright 10,000 20,000 Loss on sale of personal car 10,000 20,000 Other operating expenses 20,000 10,000 Tax rate 50% 40%

*There is a misprint in the book, this should be 2,00,000

Numerical Questions | Q 5 | Page 187

Prepare a Common size statement of profit and loss of Shefali Ltd. with the help of following information:

 Particulars 2015-16(Rs) 2016-17(Rs) Revenue from operations 6,00,000 8,00,000 Indirect expense 25% of gross profit 25% of gross profit Cost of revenue from operations 4,28,000 7,28,000 Other incomes 10,000 12,000 Income tax 30% 30%
Numerical Questions | Q 6 | Page 187

Prepare a Common Size balance sheet from the following balance sheet of Aditya Ltd. and Anjali Ltd.:

 Particulars Aditya Ltd.Rs. Anjali Ltd.Rs. I. Equity and Liabilities a) Equity share capital 6,00,000 8,00,000 b) Reserves and surplus 3,00,000 2,50,000 c) Current liabilities 1,00,000 1,50,000 Total 10,00,000 12,00,000 II. Assets a) Fixed assets 4,00,000 7,00,000 b) Current assets 6,00,000 5,00,000 Total 1,00,0000* 12,00,000

*The total of Liabilities side must be equal to the total of Assets side, therefore, it should be 10,00,000.

## NCERT solutions for Class 12 Accountancy chapter 4 - Analysis of Financial Statements

NCERT solutions for Class 12 Accountancy chapter 4 (Analysis of Financial Statements) include all questions with solution and detail explanation. This will clear students doubts about any question and improve application skills while preparing for board exams. The detailed, step-by-step solutions will help you understand the concepts better and clear your confusions, if any. Shaalaa.com has the CBSE Ncert Class 12 Accountancy - Company Accounts and Analysis of Financial Statements solutions in a manner that help students grasp basic concepts better and faster.

Further, we at Shaalaa.com provide such solutions so that students can prepare for written exams. NCERT textbook solutions can be a core help for self-study and acts as a perfect self-help guidance for students.

Concepts covered in Class 12 Accountancy chapter 4 Analysis of Financial Statements are Meaning of Analysis of Financial Statements, Significance of Analysis of Financial Statements, Objectives of Analysis of Financial Statements, Tools of Analysis of Financial Statements, Comparative Statements, Common Size Statements, Limitations of Financial Analysis.

Using NCERT Class 12 solutions Analysis of Financial Statements exercise by students are an easy way to prepare for the exams, as they involve solutions arranged chapter-wise also page wise. The questions involved in NCERT Solutions are important questions that can be asked in the final exam. Maximum students of CBSE Class 12 prefer NCERT Textbook Solutions to score more in exam.

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