NCERT Solutions for Class 12 Accountancy Chapter 3 - Financial Statements of a Company

There are 18 questions in total including those explaining the concepts as well as pertinent balance sheets and mathematical problems.

The preparation of the Financial Statements is done from Trial Balance. They are responsible for depicting the true financial position of the business and they may provide valuable financial information to the users.

Trading and Profit and Loss A/c or Income Statement

This shows the financial performance by determining the profit or loss made by a business during an accounting year.

Balance Sheet

This showcases the financial position of the business by telling about the assets, liabilities and the capital as of a particular date.

Cash Flow Statement

This is responsible for showcasing the inflow and outflow of the cash during a particular accounting period.

Financial Statements provide valuable information to stakeholders and aid them in making informed decisions.

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In ch 3 of Accounts Class 12 Part 2 of NCERT Solutions of Accountancy Class 12 Part 2 Chapter 3, you will come across the difficult concepts of the objective, importance and limitations as well as the nature and significance of Financial Statements. You will also be asked to prepare the profit and loss statements as a part of the miscellaneous exercises at the end of the chapter. These questions often appear in exams and are all explained in great detail.

All other questions are also based on how the Financial Statements ease the path for stakeholders and other personnel involved in the business in making informed financial decisions. Practicing all these questions will indefinitely make you an expert on the topic of Financial Statements of a Company. Avail your copy of the Vedantu’s Ncert Solutions for Class 12 Accountancy Part 2 Chapter 3 now and start on your journey towards a 100 % in Accountancy.

Accounting is a difficult subject regardless of whatever chapter students are studying. For Chapter 3 of Class 12 Accountancy, NCERT Solutions can be the best option for students because they are carefully crafted and assist students in writing answers correctly. Aside from that, the content offers idea clarity, a redesigned syllabus, topic-by-topic weightage, and complete correctness. The PDF format is easily accessible and portable, making it ideal for quick reference. This site provides access to all of these advantages through this link. These solutions are available free of cost on the Vedantu website and the Vedantu app.

Chapter 3 is titled 'Financial Statements of a Company' of Class 12 Accountancy. Some definitions need to be memorized by the students as the chances that these may be asked in the exam are high. NCERT Solutions for Chapter 3 of Class 12 provided by Vedantu can help score good marks as experts on the subject matter design them. So, the concepts are listed out below:

• Profit-Sharing Ratio

• Sacrificing ratio

• New Profit sharing ratio

• Gaining ratio

• Goodwill

• Admission of a partner

The sacrificing ratio is the accounting term given to that part of the profit-sharing ratio that the current partners sacrifice when a new partner joins the company, firm, or organization. The calculation of sacrificing ratio is quite simple: the difference between the old profit ratio and the new profit ratio gives the sacrificing ratio. The equation thereby is as follows:

{Sacrificing ratio= Old profit sharing ratio - New profit sharing ratio}

This is mandatory for reimbursement when a new partner enters. 

In old balance sheets, the values of assets and liabilities may not be justified and may increase or decrease. Thus, revaluation is helpful in these cases because it helps determine the true value when a new partner is admitted. So, to record changes in market values of assets and liabilities, a revaluation account should be prepared for ease of understanding profits and losses between existing partners of the company.

This Chapter is immensely useful in real-life scenarios because students can apply these concepts in companies or organizations when a new partner is admitted. In these scenarios, students would be needed to look at the following concepts:

• The profit-sharing ratio involves calculating new profit sharing ratio

• Goodwill which is the valuation and adjustment among old partners

• Revaluation of assets and liabilities

• Accumulated profits, losses, etc. which are distributed among the existing partners

• Adjustment of capital among partners.