Class 12 Accountancy NCERT Solutions Chapter 4 - Analysis of Financial Statements
FAQs on NCERT Solutions for Class 12 Accountancy Chapter 4 - Analysis Of Financial Statements
1. What do you Mean by Horizontal and Vertical Analysis?
Comparison of an item of financial statements of one period or its periods to corresponding items of the base accounting period is known as horizontal analysis. Whereas vertical analysis deals with the comparison of items of financial statements to the common items of the same accounting periods.
2. What is the main Importance of Financial Statement Analysis?
A detailed information about expenses, source of income, profit and loss, and financial position of a business can be obtained by financial statement analysis. It also helps to determine the long term solvency profit-making capability and financial viability of a business. Thus, it has great importance without it the financial data is useless.
3. Can Vedantu be Considered as a Single Source for Board Preparation?
The answer is thoroughly given through users' experience as almost every user has found Vedantu as the most reliable, precise, and a collective source for all patterns of questions at a single place. Try it yourself by downloading the Vedantu app right now!
4. What concepts are covered in Chapter 4 of Class 12 Accountancy?
The following list comprises concepts from Chapter 4 according to their weightage and importance in the exams:
Objectives of Financial Statement Analysis
Efficiency of Management
Limitations of Analysis
Types of Financial Statement Analysis
These concepts are made easier by Vedantu's NCERT Solutions, accessible through their official website and app. Every answer is detailed, yet simple for students to follow and write answers in their exams. Thus, students can focus on these concepts from this Chapter in order to score better results.
5. What are the important definitions in Chapter 4 of Class 12 Accountancy?
The Chapter underlines concepts like the meaning and analysis of financial statements of a company as they help in presenting budgetary information, logical results, and relationships, etc. Therefore, this Chapter can be considered as one of the most important one when it comes to defining concepts. The following topics listed below hold greater importance from the chapter:
Earning capacity or profitability
Financial Strength
Inter-Firm
Short term and long term solvency
Horizontal and Vertical analysis
6. What are comparative financial statements according to Chapter 4 of Class 12 Accountancy?
The comparative financial statements can be seen as statements of comparison based on both internal and external firms over a specified time frame. They provide announcements in bookkeeping-related data which are essential for the advancement of a firm. These announcements in turn represent the information in figures of supremacy or rate and outright changes happening in a fiscal year. There are two basic types of comparative financial statements, namely, the income statement and the comparative balance sheet.
7. What are the commonly used techniques of financial statement analysis?
Financial statement analysis as outlined in Chapter 4 of Class 12 Accountancy can be very confusing. NCERT Solutions available on Vedantu can make it easier for students with accurate and professional answers created in a simple structure. Moreover, understanding the common techniques used for financial statement analysis requires a great deal of understanding. These techniques comprise the following:
Comparative financial statements
Financial statements- common size
Trend analysis
Cash flow statements
Fund flow statements
Ratio analysis
These are Classified based on inter-firm and intra-firm comparisons.
8. How are NCERT Solutions useful for students in learning Chapter 4 of Class 12 Accountancy ?
When stating the usefulness of NCERT Solutions for Chapter 4, the list runs endlessly. These Solutions mandatorily clear doubts of students by providing simple, but expert answers, prospective questions for practice, clear insights, boost in getting desired marks, practical examples of company accounts, and the various financial statements so that students can relate and understand concepts, and the list goes on. Thus, these solutions become guardian angels and lifesavers especially for students attempting the board exams. These solutions are also available on the Vedantu app and they are free of cost.