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NCERT Solutions

Analysis of Financial Statements

CBSE · Class 12 · Accountancy

NCERT Solutions for Analysis of Financial Statements — CBSE Class 12 Accountancy.

111 questions64 flashcards5 concepts

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An infographic illustrating the core concept of financial statement analysis, showing financial statements as input, the analysis process, and the resulting insights and decisions. Highlight the two m
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20 Questions Solved · 3 Sections

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Test your Understanding – I

1Analysis simply means———data.Show solution
Analysis simply means simplifying data.

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2Interpretation means ————data.Show solution
Interpretation means explaining the impact of data.

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3Comparative analysis is also known as ———— analysis.Show solution
Comparative analysis is also known as horizontal analysis.

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4Common size analysis is also known as ———— analysis.Show solution
Common size analysis is also known as vertical analysis.

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5The analysis of actual movement of money inflow and outflow in an organisation is called——— analysis.Show solution
The analysis of actual movement of money inflow and outflow in an organisation is called cash flow analysis.

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Test your Understanding – II

1The financial statements of a business enterprise include:Show solution
The financial statements include the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement. So the correct option is (d) All the above.

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2The most commonly used tools for financial analysis are:Show solution
The chapter lists the commonly used tools as comparative statements, common size statements, trend analysis, ratio analysis, and cash flow analysis. Among the given options, all the above fits best.

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3An Annual Report is issued by a company to its:Show solution
An Annual Report is issued by a company to its shareholders. So the correct option is (c).

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4Balance Sheet provides information about financial position of the enterprise:Show solution
A Balance Sheet gives financial position at a point in time. So the correct option is (a).

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5Comparative statements are also known as:Show solution
Comparative statements are also known as horizontal analysis. So the correct option is (b).

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Test your Understanding – III

aThe financial statements of a business enterprise include cash flow statement.
bComparative statements are the form of horizontal analysis.
cCommon size statements and financial ratios are the two tools employed in vertical analysis.
dRatio analysis establishes relationship between two financial statements.
eRatio analysis is a tool for analysing the financial statements of any enterprise.
fFinancial analysis is used only by the creditors.
gStatement of profit and loss account shows the operating performance of an enterprise for a period of time.
hFinancial analysis helps an analyst to arrive at a decision.
iCash Flow Statement is a tool of financial statement analysis.
jIn a Common size statement each item is expressed as a percentage of some common base.

10 more solved questions in Analysis of Financial Statements

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Frequently Asked Questions

What are the important topics in Analysis of Financial Statements for CBSE Class 12 Accountancy?
Analysis of Financial Statements covers several key topics that are frequently asked in CBSE Class 12 board exams. Focus on the core concepts listed on this page and practise related questions to build confidence.
How to score full marks in Analysis of Financial Statements — CBSE Class 12 Accountancy?
Understand the core concepts first, then work through the 111 practice questions available for this chapter. Revise formulas and definitions regularly, and use flashcards for quick recall before the exam.
Where can I get free NCERT Solutions for Analysis of Financial Statements Class 12 Accountancy?
This page has free step-by-step NCERT Solutions for every exercise question in Analysis of Financial Statements (CBSE Class 12 Accountancy) — written the way examiners award marks: given, formula, working, answer.

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