Commerce Exam > Commerce Notes > Accountancy Class 12 > Important Questions - Financial Statement Analysis
Important Questions - Financial Statement Analysis | Accountancy Class 12 - Commerce PDF Download
Important Questions
Q1. State the limitations of financial statement analysis?
(2)
Q2. Give the headings under which the following items will be shown in a company's Balance Sheet
(a) Cash in hand
(b) Land
(c) Sundry Debtors
(e) Capital Redemption Reserve
(d) Debentures
(f) Loose Tools
(3)
Q3. The following credit balances were extracted from the books of Rama Ltd. on 31st March, 2013:
(2)
Share Capital (40,000 shares of ~ 10 each fully paid) 4,00,000
Draw up the 'liabilty' side of the Balance Sheet according to the requirements of the Companies Act, 2013. Also prepare Notes
Q4. The following debit balances were extracted from the books of Shruti Ltd. as on 31st March, 2013:
(3)
Draw up the 'Assets' side of the Balance Sheet according to the requirements of the Companies Act, 2013. Also prepare Notes
Q5. Prepare a statement for showing the percentage changes in the performance of Lakha ltd.
(4)
Q6. From the following information, prepare comparative statements:
(4)
Q7. What is financial statement analysis and name the different tools of financial statement analysis?
(2)
Q8. Prepare Comparative and common size Balance Sheet from the following information:
(6)
Q9. Mudra Ltd. is in the process of preparing its Balance Sheet as per Schedule III, Part I of the Companies Act, 2013 and provides its true and fair view of the financial position.
a) Under which head and sub-head will the company show ‘Stores and Spares’ in its Balance Sheet?
b) What is the accounting treatment of ‘Stores and Spares’ when the Company will calculate its Inventory Turnover Ratio?
c) The management of Mudra Ltd. want to analyse its Financial Statements. State any two objectives of such analysis.
d) Identify the value being followed by Mudra Ltd.
(4)
The document Important Questions - Financial Statement Analysis | Accountancy Class 12 - Commerce is a part of the Commerce Course Accountancy Class 12.
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FAQs on Important Questions - Financial Statement Analysis - Accountancy Class 12 - Commerce
| 1. What is financial statement analysis in commerce? |  |
Ans. Financial statement analysis in commerce refers to the process of examining and evaluating a company's financial statements to gain insights into its financial performance, stability, and profitability. It involves analyzing key financial ratios, trends, and patterns to understand the company's financial health and make informed business decisions.
| 2. Why is financial statement analysis important in commerce? | |
Ans. Financial statement analysis is crucial in commerce as it helps stakeholders, such as investors, creditors, and management, to assess the financial position and performance of a company. It provides valuable information about the company's profitability, liquidity, solvency, and operational efficiency, which aids in decision-making, investment evaluation, and risk assessment.
| 3. What are the key financial statements analyzed in commerce? | |
Ans. The key financial statements analyzed in commerce include the income statement, balance sheet, and cash flow statement. The income statement shows the company's revenues, expenses, and net income over a specific period. The balance sheet provides a snapshot of the company's assets, liabilities, and shareholders' equity at a given point in time. The cash flow statement depicts the company's cash inflows and outflows during a particular period.
| 4. What are the common financial ratios used in financial statement analysis? | |
Ans. Common financial ratios used in financial statement analysis include profitability ratios (e.g., gross profit margin, net profit margin), liquidity ratios (e.g., current ratio, quick ratio), solvency ratios (e.g., debt-to-equity ratio, interest coverage ratio), and efficiency ratios (e.g., inventory turnover ratio, accounts receivable turnover ratio). These ratios help assess the company's profitability, liquidity, leverage, and operational efficiency.
| 5. How can financial statement analysis be applied in making investment decisions? | |
Ans. Financial statement analysis plays a crucial role in making investment decisions. By analyzing a company's financial statements, investors can assess its financial stability, growth potential, and profitability. They can identify trends, compare the company's performance with industry peers, and evaluate the company's ability to generate returns. This analysis helps investors make informed investment decisions and allocate their capital effectively.
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