Accounting to its basic understanding stands for keeping record of money and all the financial transactions. All forms of companies and businesses, whether big or small, use accounting to manage their finances and transactions. It is one of the major parts of the overall operation. Students in their higher secondary classes might have selected accountancy due to their interest in the field, but solving the back exercises can be hectic at times. Solutions of financial statements of a company class 12 should be of the greatest quality, particularly when it comes to the discipline of accountancy. Because of the topics being demanding, many students find it difficult to do these tasks on their own and seek online solutions.
Financial Statement of a Company Class 12 Solutions
The Class 11 would have offered the basic fundamentals of the subject of accountancy. Whereas Class 12 NCERT Solutions is a continual part of it, which explains the concepts in a descriptive way. Here are the financial statement questions with solutions:
1. State the meaning of financial statements.
Financial statements are the end products of an accounting process. It showcases the clear picture of the performance of the company over a certain time period and such a chain of statements are used by different people for fetching the accounting information. These statements are prepared and released on a yearly basis.
2. What are the limitations of financial statements?
The limitations of financial statements are as follows:
- Financial statements only portray the quantitative data which can be presented in terms of monetary value. It does not portray the qualitative features of any transactions.
- Financial statements provide historical data which means they reflect the initial purchase price or the cost of the items. It neglects to mention higher costs brought on by growing market inflation as well as the present prices of goods relative to the market. Information and data are therefore historical in nature.
- Financial statements are dependent on human intervention.
- The statement is based on historical data which makes it difficult to predict.
3. List any three objectives of financial statements.
The three major objectives of preparing financial statements are as follows:
- Assess financial performance: Evaluate the financial position of a firm
- Determine profitability: Assess the firm's earning capacity
- Evaluate operations and management: Determine the efficiency of operations and the effectiveness of management
- Compare businesses: Compare the firm to other businesses
4. State the importance of financial statements to
(i) Shareholders
(ii) Creditors
(iii) Government
(iv) Investors
The following are the importance of financial statements for
- Shareholders: A financial statement can help a shareholder assess a company's viability and potential for profit. It gives companies enough information to evaluate their performance and financial standing.
- Creditors: To comprehend the business's creditworthiness and liquidity, a creditor needs access to a financial statement. It assists them in determining whether more investments in this business are feasible.
- Government: The government uses financial statements to calculate GDP, national income, industrial growth, and other metrics that are important for formulating policies and tackling issues like unemployment and poverty.
- Investors: A financial statements of a company class 12 that students studied, is required for investors who have made investments or who intend to make ones. The financial statement helps analyze the prospects and viability of future initiatives.
5. Prepare the format of the statement of Profit and Loss and explain its items.
Statement of Profit and Loss
For the year ended.
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S. no.
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Particulars
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Note No.
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Figures for the current year
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Figures for the previous year
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I
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Revenue from Operations
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II
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Other Income
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III
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Total Revenue
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IV
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Expenses
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Cost of Material Consumed
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Purchase of Stock-in-Trade
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Changes in Inventories of finished goods
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Work-in-progress and Stock-in-Trade
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Employee Benefit Expenses
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Finance Cost
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Depreciation and Amortisation Expenses
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Other Expenses
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Total Expenses
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V
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Profit before exceptional and extraordinary items and tax (III-IV)
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VI
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Exceptional items
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VII
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Profit before extraordinary item and tax (V-VI)
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VIII
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Extraordinary Items
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IX
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Profit Before Tax (VII-VIII)
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X
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Tax Expenses
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(1) Current Tax
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(2) Deferred Tax
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XI
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Profit/(Loss) for period from continuing operations (IX-X)
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XII
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Profit/(Loss) from discontinuing operations
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XIII
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Tax expenses of discontinuing operations
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XIV
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Profit/(Loss) from discontinuing operations (after tax (XII-XIII)
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XV
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Profit (Loss) for the period (XI + XIV)
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XVI
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Earning Per Equity Share
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(1) Basic
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(2) Diluted
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Statement of profit and loss format class 12 are:
- Revenue from Operations: An organization's core operational activities generate revenue. For financing and non-financing enterprises, the revenue source varies. Interest, dividends, and other financial services are the sources of revenue for financing organizations; sales of goods and services, together with other operational activities, are the sources of revenue for non-financing companies.
- Other Incomes:These are earnings that come from sources other than operations and are earned on their own. The sources are as follows: Profit from the sale of investments, interest income, and dividends in general. In class 12th final accounts problems with solutionsprovide this in-depth information.
Expenses: These comprise all outlays, including the price of materials used, the cost of buying trade goods, adjustments to inventory, and work-in-progress.
Conclusion
Accountancy as a discipline is considered as manual intensive and complicated which sometimes requires precise operations. Because of the topics being demanding, many students find it challenging to do these tasks on their own and seek online learning classes. The experts cover several branches of accounting ranging from financial accounting to cost accounting. It includes understanding principles, solving problems, writing reports, and providing expert guidance, all customized to assist students succeed academically in their accountancy studies.
