12th Accountancy - Financial Statement Analysis Practice Question Paper | QB365

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12th Accountancy - Financial Statement Analysis Practice Question Paper

Published on: 04/01/2020

Financial Statement Analysis

Download Tamil Nadu 12th Standard Accountancy question papers, model tests, one-mark questions, important questions, and public exam papers in PDF format. Free study materials and answer keys for TN State Board students.

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Std: 12th Standard - Accountancy

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Questions:

Generic 3

3 x 3 = 9

Briefly explain any three limitations of financial statement analysis. S. A

Explain the steps involved in preparing comparative statement

From the following particulars, prepare comparative income statement of Abdul Co. Ltd.

Particulars	2015-16 Rs.	2016-17 Rs.
Revenue from operations	3,00,000	3,60,000
Other income	1,00,000	60,000
Expenses	2,00,000	1,80,000
Income tax	30%	30%

Generic 5

2 x 5 = 10

From the following balance sheet of Gupta ltd, prepare comparative balance sheet as on 31^stMarch 2017 and 31^stMarch 2018.

Particulars	31^st March 2017	31^stMarch 2018
Particulars	Rs.	Rs.
I. Equity and liabilities
shareholder's fund	2,00,000	5,20,000
Non-current liabilities	1,00,000	1,20,000
Current liabilities	50,000	60,000
Total	3,50,000	7,00,000
II. Assets
Non-current assets	2,00,000	4,00,000
Current assets	1,50,000	3,00,000
Total	3,50,000	7,00,000

Prepare common-size statement of financial position for the following particulars of Rani Ltd.

Particulars	31st March, 2016	31st March, 2017
	Rs.	Rs.
I EQUITY AND LIABILITIES
Shareholders’ Fund	5,40,000	6,00,000
Non-current liabilities	2,70,000	2,70,000
Current liabilities	90,000	1,50,000
Total	9,00,000	10,00,000
II ASSETS
Non-current assets	7,20,000	8,00,000
Current assets	1,80,000	2,00,000
Total	9,00,000	10,00,000

Generic 2

2 x 2 = 4

What do you mean by financial statement analysis?

From the following particulars, calculate the trend percentages of Kala Ltd.

Particulars	Rs.in thousands
	2015-16	2016-17	2017-18
Revenue from operations	400	500	600
Other income	100	150	200
Expenses	200	290	350

Multiple Choice Question

4 x 1 = 4

Comparison of financial statenients highlights the trend of the ____________ of the business.

(a)

Financial position

(b)

Performance

(c)

ProfitabilityAll of the above

(d)

All of the above

______________ information is non monetary information is also important for business decisions.

(a)

Personal judgement

(b)

Qualitative

(c)

Quantitative

(d)

Historical

10.

which statements are involve personal judgment in certain cases?

(a)

Financial statements

(b)

Income statement

(c)

Profit and loss account statement

(d)

None of these

11.

The term ‘fund’ refers to

(a)

Current liabilities

(b)

Working capital

(c)

Fixed assets

(d)

Non-current assets

Odd one out

1 x 2 = 2

12.

(a) Comparative statement
(b) Agreed ratio
(c) Common-size statements
(d) Trend analysis

Assertion and reason

1 x 2 = 2

13.

Assertion (A) : Cash flow analysis is concerned with preparation of cash flow statement which shows the inflow and outflow of cash and cash equivalents in a given period of time.
Reason (R) : Funds flow analysis is useful in judging the credit worthiness, financial planning and preparation of budgets.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A)
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true

One or Two Words / Correct Statement

2 x 1 = 2

14.

Which of the following statements are true?
(i) Financial statements are only interim report
(ii) Financial statements are also known as annual records.
(iii) Financial statements are historic
(a) (i) and (ii)
(b) (i) and (iii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

15.

Which of the following statements are true?
(i) External analysis depends entirely on issued financial statements.
(ii) Interpretation and analysis both are different
(iii) Financial analysis covers interpretation.
(a) (i) and (ii)
(b) (i) and (iii)
(c) (ii) and (iii)
(d) (i), (ii) and (iii)

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Answers Key:

Generic 3

3 x 3 = 9

Following are the limitations of financial statement analysis
(i) All the limitations of financial statements such as ignoring non-monetary information, ignoring price level chances, etc., are applicable to financial statement analysis also.
(ii) Expert knowledge is required in analysing the financial statements.
(iii) Interpretation of the analysed data involves personal judgement as different experts may give different views

A comparative statement has five columns. Following are the steps to be followed in preparation of the comparative statement.
(i) Column 1: In this column, particulars of items of income statement or balance sheet are written.
(ii) Column 2: Enter absolute amount of year 1
(iii) Column 3: Enter absolute amount of year 2
(iv) Column 4: Show the difference in amounts between year 1 and year 2. If there is an increase in year 2, put plus sign and if there is decrease put minus sign.
(v) Column 5: Show percentage increase or decrease of the difference amount shown in column 4 by dividing the amount shown in column 4 (absolute amount of increase or decrease) by column 2 (year 1 amount). That is,
Percentage increase or decrease
\(\frac{Absolute \ amount \ of \ increase \ or \ decrease}{Year \ 1 \ amount}\times100\)
Format of comparative statement:

Particular	Year 1	Year 2	Absolute amount of increase (+) or Decrease (-)	Percentage increase (+) ordecreases (-)
Particular	Rs.	Rs.	Rs.	Percentage increase (+) ordecreases (-)
(1)	(2)	(3)	(4)	(5)

Comparative income statement of Abdul Co. Ltd for the years ended 31^st March, 2016 and 31^st March, 2017
Particulars	2015-16	2016-17	Absolute amount of increase (+) or decrease (–)	Percentage increase (+) or decrease (–)
	Rs.	Rs.	Rs.
Revenue from operations	3,00,000	3,60,000	+60,000	+20
Add: Other income	1,00,000	60,000	–40,000	–40
Total revenue	4,00,000	4,20,000	+20,000	+5
Less: Expenses	2,00,000	1,80,000	–20,000	–10
Profit before tax	2,00,000	2,40,000	+40,000	+20
Less: Tax (30%)	60,000	72,000	+12,000	+20
Profit after tax	1,40,000	1,68,000	+28,000	+20

Generic 5

2 x 5 = 10

Solution:

Comparative balance sheet of Gupta Ltd as on 31st March 2017 and 31st 1March 2018
Particulars	2016-17 (Rs.)	2017-18 (Rs.)	Absolute amount of increase (+) or decrease (-)	Percentage increase (+) or decrease (-)
	Rs.	Rs.	Rs.
I. Equity and liabilities
Shareholder's fund	2,00,000	5,20,000	+ 3,20,00	+ 160
Non-current liabilities	1,00,000	1,20,000	+ 20,000	+ 20
Current liabilities	50,000	60,000	+ 10,000	+20
Total	3,50,000	7,00,000	3,50,000	+ 100
II. Assets
Non-current assets	2,00,000	4,00,000	+ 2,00,000	+ 100
Current assets	1,50,000	3,00,000	+ 1,50,000	+ 100
Total	3,50,000	7,00,000	3,50,000	+ 100

Common-size balance sheet of Rani Ltd for the year ended 31st March, 2016 and 31st March, 2017
Particulars	Absolute amount 2015-16	Percentage of total assets	Absolute amount 2016-17	Percentage of total assets
Particulars	Rs.	Rs.	Rs.	Percentage of total assets
I Equity and Liabilities
Share holder's funds	5,40,000	60	6,00,000	60
Non-current liabilities	2,70,000	30	2,50,000	25
Current liabilities	90,000	10	1,50,000	15
Total	9,00,000	100	10,00,000	100
II Assets
Non-current assets	7,20,000	80	8,00,000	80
Current assets	1,80,000	20	2,00,000	20
Total	9,00,000	100	10,00,000	100

Note: In 2015-16
Percentage of shareholders fund = \(\frac{5,40,000}{9,00,000}\) x 100 = 60%
Percentage of Non-current liabilities = \(\frac{2,70,000}{9,00,000}\) x 100 = 30%
Percentage of current liabilities = \(\frac{90,000}{9,00,000}\) x 100 = 10%
Percentage of non-current assets = \(\frac{7,20,000}{9,00,000}\) x 100 = 80%
Percentage of current assets = \(\frac{1,80,000}{9,00,000}\) x 100 = 20%
In 2016-17
Percentage of share holders fund = \(\frac{6,00,000}{10,00,000}\) x 100 = 60%
Percentage of Non-current liabilities = \(\frac{2,50,000}{10,00,000}\) x 100 = 25%
Percentage of current liabilities = \(\frac{1,50,000}{10,00,000}\) x 100 = 15%
Percentage of Non-current assets = \(\frac{8,00,000}{10,00,000}\) x 100 = 80%
Percentage of current assets = \(\frac{2,00,000}{10,00,000}\) x 100 = 20%

Generic 2

2 x 2 = 4

Financial statement analysis is comparison of the various items in the financial statements by establishing and evaluating relationship among them. So that, it gives a better understanding of the performance and financial status of the business concern.

Trend analysis for kala ltd
Particulars	Rs. in thousands			Trends percentage
Particulars	2015-16	2016-17	2017-18	2015-16	2016-17	2017-18
Revenue from operations	400	500	600	100	125	150
Add: Other income	100	150	200	100	150	200
Total revenue	500	650	800	100	130	160
Less: Expenses	200	290	350	100	145	175
Profit aftertax	300	360	450	100	120	150

Note: 2016 - 17.
Percentage for Revenue from operations = \(\frac{500}{400}\) x 100 = 125%
Percentage of other income = \(\frac{150}{100}\) x 100 = 150%
Percentage of total revenue = \(\frac{650}{500}\) x 100 = 130%
Percentage for expenses = \(\frac{290}{500}\) x 100 = 145%
Percentage for profit before tax = \(\frac{360}{300}\) x 100 = 120%
In 2017 -18.
Percentage for revenue from operations = \(\frac{600}{400}\) x 100 = 150%
Percentage for other income = \(\frac{200}{100}\) x 100 = 200%
Percentage of total revenue = \(\frac{800}{500}\) x 100 = 160%
Percentage for expenses = \(\frac{350}{200}\) x 100 = 175%
Percentage for profit before tax = \(\frac{450}{300}\) x 100 = 150%