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Revision Notes for Class 12 Accountancy Part 2 Chapter 4 Analysis of Financial Statements
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Part 2 Chapter 4 Analysis of Financial Statements Notes Class 12 Accountancy
Financial Statements: Financial statements are the end products of accounting process, which reveal the financial results of a specified period and financial position as on a particular date. These statements include income statement and balance sheet. The basic objective of these statements is to provide information required for decision making by the management as well as other outsiders who are interested in the affairs of the undertaking. Section 129 of as per
Schedule III to the Companies Act, 2013 every year.
1. Balance Sheet: The balance sheet shows all the assets owned by the concerned, all the obligations or liabilities payable to outsiders or creditors and claims of the owners on a particular date.
2. Income statement or Statement of Profit and Loss : The Income Statement or Profit and Loss is prepared for theperiod (12 months) to determine the operational results of an undertaking. It is a statement of revenue earned and the expenses incurred for earning the revenue.
3. Notes to Accounts. (Balance Sheet & Statement of Profit and Loss) supported by the notes in which details of items is given
4. Cash Flow Statement. Cash flow statement provides information changes in cash and cash equivalents of an enterprise by classifying cash flows into operating, investing and financingactivities for a particular period of time i.e financial year as per AS-3.
ØEmployee Benefit Expenses- Expenses payment made to and for the benefits of the employees. Example- Wages, Salaries, Bonus, Leave encashment, Staff welfare expenses, ESOP expenses are shown in the notes to Accounts on Employee Benefit Expenses and total of these is shown on the face of the statement of Profit and Loss against Employee Benefit Expenses.
ØFinance Cost-Means cost incurred by the company on the borrowings i.e loan processing fee, discount if issues of debenture written off, premium payable of redemption of debenture, interest paid on bank overdraft.
ØBank charges are not a finance cost they come under other expenses as they are expenses on service availed from bank.
Q.1. List any three items that can be shown as contingent Liabilities in a company's Balance sheet.
Ans: (i) Claims against the Company not acknowledged as debts. (ii) Uncalled Liability on partly paid shares.
(iii) Arrears of Dividend on Cumulative preference shares.
Q.2. How is a Company's balance sheet different from that of a Partnership firm? Give two point only?
Ans. (i) For company's Balance Sheet there is a standard forms prescribed under the companies Act.2013 .Whereas, there is no standard form prescribed under the Indian partnership Act, 1932 for a partnership Firms balance sheet.
(ii) 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.
Q.3. How does analysis of financial statements suffer 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.
Q.4. Operating Cycle and The period when payment is made given below, how will you classify the liabilities.
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CBSE Class 12 Accountancy Important Formulas |
CBSE Class 12 Accountancy Accounting For Not For Profit Organisations Notes Set A |
CBSE Class 12 Accountancy Accounting For Not For Profit Organisations Notes Set B |
CBSE Class 12 Accountancy Accounting For Partnership Firms Admission Of A Partner Notes |
CBSE Class 12 Accountancy Accounting For Partnership Firms Fundamentals Notes |
CBSE Class 12 Accountancy Reconstitution Of Partnership Notes |
CBSE Class 12 Accountancy Retirement Or Death Of A Partner Notes |
CBSE Class 12 Accountancy Dissolution Of A Partnership Firm Notes |
CBSE Class 12 Accountancy Accounting For Debentures Notes |
CBSE Class 12 Accountancy Redemption Of Debenture Notes |
CBSE Class 12 Accountancy Financial Statement Of Companies Notes |
CBSE Class 12 Accountancy Analysis Of Financial Statements Notes |
CBSE Class 12 Accountancy Partnership Common Size And Comparative Statements Notes |
CBSE Class 12 Accountancy Part 2 Chapter 4 Analysis of Financial Statements Notes
We hope you liked the above notes for topic Part 2 Chapter 4 Analysis of Financial Statements which has been designed as per the latest syllabus for Class 12 Accountancy released by CBSE. Students of Class 12 should download and practice the above notes for Class 12 Accountancy regularly. All revision notes have been designed for Accountancy by referring to the most important topics which the students should learn to get better marks in examinations. Our team of expert teachers have referred to the NCERT book for Class 12 Accountancy to design the Accountancy Class 12 notes. After reading the notes which have been developed as per the latest books also refer to the NCERT solutions for Class 12 Accountancy provided by our teachers. We have also provided a lot of MCQ questions for Class 12 Accountancy in the notes so that you can learn the concepts and also solve questions relating to the topics. We have also provided a lot of Worksheets for Class 12 Accountancy which you can use to further make yourself stronger in Accountancy.
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