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Published on: 05/09/2019
Financial Statement Analysis
Download CBSE Class 12th Standard CBSE Accountancy question papers, sample papers, important questions, and previous year solved papers in PDF format. Get free study materials, NCERT solutions, and exam preparation resources for Class 12th Standard CBSE Accountancy
Questions + Answers key
Take MCQ Accountancy Test
1.
State how financial statement analysis is considered historical in nature.
2.
State the interest of investors in the analysis of financial statements.
3.
Name two parties interested in Financial Statement Analysis.
4.
State the significante of analysis of financial statements to the 'creditors'.
5.
Why is the government interested in analysing financial statements ?
6.
What is meant by analysis of financial statements ?
7.
Identify the values involved in comparative analysis and common size statement.
8.
IUf selling and distribution expenses have increased from Rs 1,00,000 to Rs 2,00,000, then by how much will it increase or decrease in percentage form?
9.
Which item is assumed to be 100 in case of common size income statement?
10.
With the help of the given information obtained from the books Raghu Ltd.,prepare a Comparative Statement of Profit and Loss for the year ended 31.03.2013:
| Particulars | Note No. | 2012-13 | 2011-12 |
|---|---|---|---|
|
Revenue from Operations |
Rs.20,00,000 |
Rs.17,00,000 |
|
|
Cost of Revenue from Operations |
70% of Revenue from operations |
60% of Revenue from Operations |
|
|
Other Expenses |
Rs.42,000 |
Rs.68,000 |
|
|
Other Incomes |
Rs.20,000 |
Rs.14,000 |
|
| Income Tax | 50% | 50% |
11.
State how financial statement analysis is not free from basis.
12.
Prepare common size income statement from the following Staement of profit and loss.
| Particulars | 31st March,2014 Amt(Rs) | 31st march,2015 Amt(Rs) |
|---|---|---|
| I.Income | ||
| Revenue from Operations(Net Sales) | 5,00,000 | 5,00,000 |
| Other Income | 5,000 | 5,500 |
| Total | 5,05,000 | 5,05,000 |
| II.Expenses | ||
| Purchase of Stock-in-trade | 3,25,000 | 3,50,000 |
| Changes in Inventories of Stock-in-trade | 25,000 | 24,000 |
| Employees Benefit Expenses | 40,000 | 49,000 |
| Other Expenses | 58,750 | 45,000 |
| III.Profit(I-II) | 56250 | 37500 |
| Total | 4,48,750 | 4,68,000 |
13.
From the following balance sheets of Sun Ltd as at 31st March, 2014 and 2015, prepare a common size balance sheet
| Particulars | Note No | 31st March,014 Amt(Rs) | 31st March,2015 Amt(Rs) |
|---|---|---|---|
| I.EQUITY AND LIABILITIES | |||
| 1.Shareholdrs' Funds | |||
| (a) Share Capital | 30,000 | 40,00,000 | |
| (b) Reserves and Surplus | 4,00,000 | 6,00,000 | |
| 2.Non-current Liablities | |||
| Long-term Browings | 10,00,000 | 12,00,000 | |
| 3.Current Liabilities | |||
| Trade Payables | 6,00,000 | 2,00,000 | |
| Total | 50,00,000 | 60,00,000 | |
| II.ASSETS | |||
| 1.Non-Current Assets | |||
| (a) Fixed Assets | |||
| (i) Tangible Assets | 30,00,000 | 40,00,000 | |
| (ii) Intengibla Assets | 6,00,000 | 2,00,000 | |
| 2.Current Assets | |||
| (a) Inventories | 10,00,000 | 12,00,000 | |
| (b) Cash and Cash Equivalents | 4,00,000 | 6,00,000 | |
| Total | 50,00,000 | 60,00,000 |
14.
Rearrange the following in the form of a comparative income statement or statement of profit and loss.
| Particulars | 31st March, 2014 Amt(Rs) | 31st March,2015 Amt(Rs) |
|---|---|---|
| Revenue from Operations (Net Sales) | 16,00,000 | 19,20,000 |
| Purchase of Stock-in-trade | 9,00,000 | 11,00,000 |
| Changes in Inventories of stock-in-trade | 1,00,000 | 60,000 |
| Other Expenses | ||
| Office and And Administration | 2,80,000 | 3,80,000 |
| Selling and Distribution | 1,80,000 | 1,40,000 |
| General Expenses | 20,000 | 10,000 |
1.
( )
Financial statements analysis is considered as historical in nature because the analysis is made on data which is of past and not of furture.
2.
( )
Inverters are intrested in the safty of their capital as well as apprteciation of their capital through financial analysis.
3.
( )
(i) Invertors and (ii) Management
4.
( )
Creditors are intersted to know the liquidlity of the business whether the business is able to pay their debts on maturity.
5.
( )
On the basis of analysis of financial statements, government can judge which industry is progressing on the desired lines and which industry needs help.
6.
( )
The process of critical evaluation of the financial information contained in the financial statements, in order to understand and make decisions regarding the operations of the firm, is called financial statement analysis.
7.
Values Involved in comparative and common size statement are:
(i) Comparative financial information for interested parties
(ii) Decision-making
(iii) Transparency
(iv) Scientific temperament
(v) Critical analysis
8.
It will increase by 100%
9.
Generally, the amount of net sales from operations is assumed to be 100 in case of common size income statement
10.
Percentage change : Revenue from Operations 25%, Other income 50%, Cost of Revenue from Operations 37.25%; Other Expenses (38.24%),profit before and after Tax (7.67%) each
11.
Accounting data is dumb. Any consolution can be drawn from such data. Thus, conclusions are influenced, to a certain extent, by the personal judgement of the analyst may treat the profit before taxes.
12.
Common size Income Statement
for the years ended 31st March,2014 and 2015
| particulars | Absolute Amount | Percentage of Revenue from Operations (Net Sales) | ||
|---|---|---|---|---|
| 2014 (Rs) | 2015 (Rs) | 2014 (%) | 2015 (%) | |
| I.Revenue from Operations(Net Sales) | 5,00,000 | 5,00,000 | 100.00 | 100.00 |
| II.Other Income | 5,000 | 5,500 | 1.00 | 1.10 |
| III.Total Revenue(I+III) | 5,05,000 | 5,05,500 | 101.00 | 101.10 |
| IV.Expenses | ||||
| (a) Purchase of Stock-in-trade | 3,25,000 | 3,50,000 | 65.00 | 70.00 |
| (b) Changes in Inventories of Stock-in-trade | 25,000 | 24,000 | 5.00 | 4.80 |
| (c) Employees Benefit Expenses | 40,000 | 49,000 | 8.00 | 9.80 |
| (d) other Expenses | 2,500 | 7,500 | 0.50 | 1.50 |
| Total Expenses | 3,92,5000 | 4,30,500 | 78.50 | 86.10 |
| V.Profit before Tax(III-IV) | 1,12,500 | 75,000 | 22.50 | 15.00 |
| (-) Provision for Tax | 56,250 | 37,500 | 11.25 | 7.50 |
| VI.Profit after Tax | 56,250 | 37,500 | 11.25 | 7.50 |
13.
Common Size Balance Sheet
as at 31st March,2014 and 2015
| Particulars | Absolute Amount | Percentage of Balance Sheet Total 2014(%) | Percentage of Balance Sheet Total 2015(%) | |
|---|---|---|---|---|
| 2014(Rs) | 2015(Rs) | |||
| I.EQUITY AND LIABILITIES | ||||
| 1.Shareholders' Funds | ||||
| (a) Share Capital | 30,00,000 | 40,00,000 | 60 | 66.7 |
| (b) Reserves and Surplus | 4,00,000 | 6,00,000 | 8 | 10.0 |
| 2.Non-current Liabilities | ||||
| Long-term Borrowings | 10,00,000 | 12,00,000 | 20 | 20.0 |
| 3.Current Liabilites | ||||
| Trade Payables | 6,00,000 | 2,00,000 | 12 | 3.3 |
| Total | 50,00,000 | 60,0,000 | 100 | 100 |
| II.ASSETS | ||||
| 1.Non-current Assets | ||||
| (a) Fixed Assets | ||||
| (i) Tangible Assets | 30,00,0000 | 40,00,000 | 60 | 66.7 |
| (ii) Intangible Assets | 6,00,000 | 2,00,000 | 12 | 3.3 |
| 2.Current Assets | ||||
| (a) Inventories | 10,00,000 | 12,00,000 | 20 | 20.0 |
| (b) Cash and Cash Equivalents | 4,00,000 | 6,00,000 | 8 | 10.0 |
| Total | 50,00,0000 | 60,00,000 | 100 | 100 |
14.
Comparative Statement of Profit and Loss
for the years ended 31st march, 2014 and 2015
| Particulars | 31st March 2014 Amt(Rs) | 31st March 2015 Amt(Rs) | Absolute change (Increase or Decrease) (Rs) |
Percentage Change (Increase or Decrease) (Rs) |
|---|---|---|---|---|
| I. Revenue from Operations(Net Sales) | 16,00,000 | 19,20,000 | 3,20,000 | 20.00 |
| II. Expenses | ||||
| (a) Purchase of Stock-in-trade | 9,00,000 | 11,00,000 | 2,00,000 | 22.22 |
| (b) Changes in Inventories of Stock-in-trade | 1,00,000 | 60,000 | (40,000) | (40.00) |
| (c) Other Expenses | 4,80,000 | 5,30,000 | 50,000 | 10.42 |
| Total Expenses | 14,80,000 | 16,90,000 | 2,10,000 | 14.19 |
| III. Profit before and after Tax(1-III) | 1,20,000 | 2,30,000 | 1,10,000 | 91.67 |
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