NCERT Solutions for Class 12 Accountancy - Company Accounts and Analysis of Financial Statements

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 dividend
(vii) Share forfeited account
(viii) Capital redemtion reserve
(ix) Mining rights
(x) Work-in-progress

The current ratio provides a better measure of overall liquidity only when a
firm’s inventory cannot easily be converted into cash. If inventory is liquid, the
quick ratio is a preferred measure of overall liquidity. Explain.

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

The liquidity of a business firm is measured by its ability to satisfy itslong-
term obligations as they become due. What are the ratios used forthis purpose?

What relationships will be established to study?
(a) Inventory Turnover (b) Debtor Turnover
(c) Payables Turnover (d) Working Capital Turnover

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

State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors

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

What are liquidity ratios? Discuss the importance of current and liquid ratio.

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

The liquidity of a business firm is measured by its ability to satisfy itslong-
term obligations as they become due. What are the ratios used forthis purpose?

Explain how common size statements are prepared giving an example.

What are various types of ratios?

State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors

The current ratio provides a better measure of overall liquidity only when a
firm’s inventory cannot easily be converted into cash. If inventory is liquid, the
quick ratio is a preferred measure of overall liquidity. Explain.

State the meaning of financial statement analysis?

‘Financial statements reflect a combination of recorded facts, accounting
conventions and personal judgements’ discuss.

What do you mean by Ratio Analysis?

Prepare the format of balance sheet and explain the various elements of balance sheet.

State the importance of Financial Analysis?