List any three objectives of analysing f | Class 12 Accountancy - Company Accounts and Analysis of Financial Statements Chapter Financial Statements of a Company, Financial Statements of a Company NCERT Solutions

How will you disclose the following items in the Balance Sheet of a company;
(i) Loose tools
(ii) Uncalled liability on partly paid-up shares
(iii) Debentures redemption reserve
(iv) Mastheads and publishing titles                                                                        (v) 10% debentures
(vi) Proposed dividend
(vii) Share forfeited account
(viii) Capital redemtion reserve
(ix) Mining rights
(x) Work-in-progress

The current ratio provides a better measure of overall liquidity only when a
firm’s inventory cannot easily be converted into cash. If inventory is liquid, the
quick ratio is a preferred measure of overall liquidity. Explain.

Explain the usefulness of trend percentages in interpretation of financial performance of a company.

The liquidity of a business firm is measured by its ability to satisfy itslong-
term obligations as they become due. What are the ratios used forthis purpose?

What relationships will be established to study?
(a) Inventory Turnover (b) Debtor Turnover
(c) Payables Turnover (d) Working Capital Turnover

What do you understand by analysis and interpretation of financial statements? Discuss its importance.

Describe the different techniques of financial analysis and explain the limitations of financial analysis.

What are liquidity ratios? Discuss the importance of current and liquid ratio.

State the importance of financial statements to
(i) shareholders
(ii) creditors
(iii) government
(iv) investors

What is the importance of comparative statements? Illustrate youranswer with particular reference to comparative income statement.

What do you mean by Ratio Analysis?

Explain the nature of the financial statements.

Under which head is the ‘Debenture Redemption Reserve’ shown in the balance sheet?

What is meant by redemption of debentures by conversion?

Explain the limitations of financial statements.

Prepare the format of statement of profit and loss and explain its items.

What are important profitability ratios? How are these worked out?

Prepare the format of balance sheet and explain the various elements of balance sheet.

Explain the different types of debentures?

Can the company purchase its own debentures?