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Accounting Ratios

CBSE · Class 12 · Accountancy

Step-by-step guide to study Accounting Ratios in CBSE Class 12 Accountancy. Topics to cover, practice strategy, and time allocation.

125 questions80 flashcards5 concepts

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An infographic illustrating the role of accounting ratios as a tool for financial statement analysis, showing how they help assess profitability, liquidity, solvency, and efficiency for various stakeh
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Study Plan

1
Day 1–2

Learn the Theory

Read the textbook chapter carefully. Note down definitions, formulas, and key concepts.

2
Day 3

Practice Problems

Solve textbook exercises and additional practice questions. There are 125 questions available for this chapter.

3
Day 4

Revise & Test

Revise key formulas and concepts without looking at notes. Take a practice quiz to test your understanding. Mark weak areas for re-revision.

4
Day 7

Spaced Revision

Revisit Accounting Ratios after a week. Use flashcards for quick recall. Solve previous year questions from this chapter.

What to Focus On

  • A ratio shows the relationship between two or more numbers.
  • A ratio may be expressed as fraction, proportion, percentage, or number of times.
  • Accounting ratios are derived from financial statement figures.

  • Objectives include analysis, comparison, and forecasting.
  • Advantages include simplification, comparison, and problem identification.
  • Ratios help in intra-firm, inter-firm, and industry comparison.

  • Traditional classification includes profit and loss ratios, balance sheet ratios, and composite ratios.
  • Functional classification includes liquidity, solvency, activity, and profitability ratios.
  • Traditional classification is rarely used in practice.

Common Mistakes to Avoid

Current Ratio and Quick Ratio mean the same thing.

In Quick Ratio, only inventory is excluded from current assets.

Current ratio and quick ratio should always be judged only by a fixed ideal number.

Memory Tips

Meaning of accounting ratio

Traditional and functional classification of ratios

Current ratio formula and safe benchmark

Quick ratio and excluded items

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Frequently Asked Questions

What are the important topics in Accounting Ratios for CBSE Class 12 Accountancy?
Accounting Ratios 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 Accounting Ratios — CBSE Class 12 Accountancy?
Understand the core concepts first, then work through the 125 practice questions available for this chapter. Revise formulas and definitions regularly, and use flashcards for quick recall before the exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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