CBSE XII Accountancy paper : Last moment quick revision ( Financial Statement Analysis)

 

 

 

We have already discussed about quick revision points in partnership Accounts , company Accounts and accounting for not-for profit organisations in previous posts. You can go through the following  link given after this post. In this article lets discuss the quick revision points to remember at the last moment in section-3 (analysis of financial statements) carrying 20 marks.

• Cash Flow Statement is prepared as per AS-3 revised.


• Cash Flow statement is prepared to know the inflow and outflow of cash from different business activities for a particular time period.


• Inflow of cash from operating activities- Sale of goods, cash received for the services rendered, Royalty received, Commission received etc.


• Outflow of cash from Operating activities- Purchase of goods for cash, rent paid, salary paid, commission paid, wages paid, payment made for services.


• Inflow of cash from Investing activities- Rent received, sale of tangible assets, sale of intangible assets, Dividend received, interest received.


• Outflow of cash from Investing activities- Purchase of Non- current assets.


• Inflow of cash from financing activities- Issue of shares for cash, issue of debentures for cash, took loan, increase in bank overdraft etc.


• Outflow of cash from for financing activities- Buy back of equity shares, redemption of debentures, repayment of loan and preference shares, payment for bank overdrafts, payment of dividend (interim as well as proposed), interest on loan.


• Interest received and dividend received results in inflow of cash from operating activities in case of financing company.


• Interest on loan,interest on debentures and interest on investment are calculated on previous year balance if question is silent on the date.


• Depreciation is a non cash expense.


• Cash and cash equivalent means cash in hand, cash at bank, marketable securities.


• Current investment is treated as marketable securities in the absence of specific information.


• Decrease in value of intangible assets is treated as amortisation not sale in the absence of any specific information.


• Decrease in the value of tangible assets upto 15% is treated as depreciation in the absence of any specific information.


• Current ratio is also known as working capital ratio.


• Ideal current ratio is 2:1, ideal liquid ratio 1:1.


• Liquidity ratios are expressed in absolute form.


• Solvency ratios except ICR are expressed in absolute form.


• Turnover ratios are expressed in times form.


• Profitability ratios are expressed in percentage.


• Cost of goods sold can be considered as net sales if it is not possible to find out net sales.

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For quick revision points in partnership just go through the following link: CBSE XII Accountancy Paper : Last moment quick revision (Partnership)

CBSE XII Accountancy Paper : Last moment quick revision (Company and NPO)