State the meaning of Analysis and Interpretation.
Analysis and Interpretation refers to a systematic and critical examination of
the financial statements. It not only establishes cause and e Tect relationship
among the various items of the financial statements but also presents the
financial data in a proper manner. The main purpose of Analysis and
Interpretation is to present the financial data in such a manner that is easily
understandable and self-explanatory. This not only helps the accounting users to
assess the fi nancial performance of the business over a period of time but also
enables them in decision making and policy and financial designing process.
Popular Questions of Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
- Q:-
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 - Q:-
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. - Q:-
Explain the usefulness of trend percentages in interpretation of financial performance of a company.
- Q:-
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? - Q:-
What relationships will be established to study?
(a) Inventory Turnover (b) Debtor Turnover
(c) Payables Turnover (d) Working Capital Turnover - Q:-
What do you understand by analysis and interpretation of financial statements? Discuss its importance.
- Q:-
State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors - Q:-
What are liquidity ratios? Discuss the importance of current and liquid ratio.
- Q:-
What is the importance of comparative statements? Illustrate youranswer with particular reference to comparative income statement.
- Q:-
What do you mean by Ratio Analysis?
Recently Viewed Questions of Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
- Q:-
Prepare the format of balance sheet and explain the various elements of balance sheet.
- Q:-
‘Financial statements reflect a combination of recorded facts, accounting
conventions and personal judgements’ discuss. - Q:-
The average age of inventory is viewed as the average length of time inventory is held by the firm or as the average number of days’ sales in inventory. Why?
- Q:-
What do you understand by analysis and interpretation of financial statements? Discuss its importance.
- Q:-
What are liquidity ratios? Discuss the importance of current and liquid ratio.
- Q:-
What do you mean by Common Size Statements?
- Q:-
What do you mean by Ratio Analysis?
- Q:-
Explain how financial statements are useful to the various parties who are interested in the affairs of an undertaking?
- Q:-
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? - Q:-
What relationships will be established to study?
(a) Inventory Turnover (b) Debtor Turnover
(c) Payables Turnover (d) Working Capital Turnover
- NCERT Chapter