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Financial Statements Analysis Important Questions for CBSE Class 12 Accountancy Tools of Financial Statements Analysis

Tools of Financial Statements Analysis There are different tools of financial statements analysis available to the analyst. The following tools are used to measure the operational efficiency and financial soundness of an enterprise.
The most common used techniques of financial analysis are:
1. Comparative financial statements
2.Common size statements
3.Ratio analysis
4.Cash flow statements

1.Comparative Financial Statements Statements used to compare the items of income statement i.e. profit and loss account and position statement i.e. balance sheet for ascertaining the trend of the performance and profitability of an enterprise are known as comparative financial statements.
(i)Comparative income statement It is a statement which shows in percentage term the total of income earned and expenses incurred during two or more accounting periods.
Format of Comparative Income Statement

(ii)Comparative balance sheet It is a statement showing assets and liabilities of the business for two or more accounting periods. It also shows the percentage change in the monetary value of the assets and liabilities.
Format of Comparative Income Statement

2.Common Size Statement The statement wherein figures reported are converted into percentage to some common base is known as common size statement. Each percentage shows the relation of the individual item to its respective total.
(i) Common size income statement The statement in which sales figure is assumed to be 100 and all other figures are expressed as a percentage of sales is known as common size income statement.

(ii)Common size balance sheet In common size balance sheet, the total of assets or liabilities is assumed to be 100 and figures are expressed as a percentage of the total.
Format of Common Size Balance Sheet

3.Ratio Analysis The mathematical expression that shows the relationships between various groups of items contained in the financial statements is known as ratio analysis.

4.Cash Flow Statement It shows the inflows and outflows of cash and cash equivalents of an enterprise by classifying cash flows into operating, investing and financing activities during a particular period and analysing the reasons for changes in balance of cash between the two balance sheets dates.

Previous Years’Examinations Questions

1 Mark Questions

1.Which item is assumed to be 100 while preparing common size statement of profit
and loss? (Compartment 2014)
Ans. Revenue from operations are assumed to be 100 while preparing common size statement of profit and loss.

2.Name any two tools of analysis of financial statements. (Compartment 2014)
Ans. Two tools of analysis of financial statements are:
(i) Ratio analysis                 (ii) Cash flow statement

3.What is meant by a common size statements? (Delhi 2011)
Ans. The statement wherein figures reported are converted into percentage to some common base are known are common size statements. Each percentage shows the relation of the individual item to its respective total. In common size income statement, net sales figure is assumed to be 100 and all other figures of expenses are expressed as a percentage of sales. In common size balance sheet, the total of assets or liabilities is assumed to be 100 and figures are expressed as a percentage of the total.

3 Marks Questions

4. From the following information, prepare a comparative statement of profit and loss for the year 2009-2010

Other Information
(i)Income tax is calculated @ 50%.
(ii)Manufacturing expenses are 50% of the total of that category. (All India 2011; Modified)
Ans.

5.From the following information, prepare a comparative statement of profit and loss for the years 2009 and 2010

Other Information
(i) Income tax is calculated @ 50%.
(ii) Manufacturing expenses are 50% of the total of that category. (Delhi 2011 C; Modified)

Ans.

6.What are common size statements? State any two uses of common size statements.(All India 2008)
Ans. Common size statement The statement wherein figures reported are converted into percentage to some common base are known are common size statements. Each percentage shows the relation of the individual item to its respective total. In common size income statement, net sales figure is assumed to be 100 and all other figures of expenses are expressed as a percentage of sales. In common size balance sheet, the total of assets or liabilities is assumed to be 100 and figures are expressed as a percentage of the total.
Uses of common size statements are as follows:
(i) It helps in comparing the relative values of various items of income statement and position statement over two or more accounting periods. Thus, financial managers prepare common size statements for business reporting and decision-making purposes.
(ii) Common size statements prepared by the firm over the years would highlight the relative change in each group of income, expenses, assets and liabilities.

4 Marks Questions

7.From the following statement of profit and loss of Fenox Ltd for the year ended 31st March, 2013, prepare a comparative statement of profit and loss

Ans.

8.On the basis of the following information extracted from the statement of profit and loss for the year ended 31st March, 2012 and 2013, prepare a comparative statement of profit and loss:

Ans.

9.From the following statement of profit and loss of Suntrack Ltd, for the years ended 31st March, 2011 and 2012, prepare a ‘comparative statement of profit and loss’.

Ans.

10.From the following statement of profit and loss of Moontrack Ltd., for the years ended 31st March, 2011 and 2012, prepare a ‘comparative statement of profit and loss.

Ans.

11.From the following income statement, prepare a common size statement of profit and loss Jayant Ltd for the year ended 31st March, 2011

Ans.

12.Followings is the statement of profit and loss of Raj Ltd for the year ended 31st March, 2011

Prepare a common size statement of profit and loss of Raj Ltd for the year ended 31st March, 2011.(Delhi 2012; Modified)
Ans.

13.Prepare a comparative statement of profit and loss from the following informations

Ans.

NOTE Wages paid are a part of direct expenses and they are already included in cost of goods sold.

14.Prepare a comparative statement of profit and loss from the following information

Ans.

NOTE Carriage inwards are a part of direct expenses and they are already included in cost of goods sold.

15.From the following information given below, prepare a comparative statement of profit and loss

Ans.

NOTE Purchase is a part of cost of goods sold and thus not shown separately

16.From the following information given below, prepare a comparative income statement of profit and loss

Ans.

17.Prepare a comparative statement of profit and loss from the following

Ans.

NOTE Purchase is a part of cost of goods sold and thus not shown separately.

18.Prepare a comparative statement of profit and loss from the following

Ans.

NOTE Purchase is a part of cost of goods sold and thus not shownseparately.

19.From the following information provided, prepare a comparative statement for the period 2008 and 2009

Ans.

20.From the following information provided, prepare a comparative statement of profit and loss for the period 2008 and 2009.

Ans.

21. Prepare a comparative statement of profit and loss from the following

Ans.

22.From the following information, prepare a comparative statement of profit and loss Vimal Ltd.

Ans.

23. From the following information, prepare a comparative statement of profit and loss Victor Ltd.

Ans.

Important Questions for Class 12 AccountancyClass 12 AccountancyNCERT Solutions Home Page

Formulae Handbook for Class 10 Maths and Science

NCERT Solutions for Class 10 Social Science History Chapter 5 The Age of Industrialisation

NCERT Solutions for Class 10 Social History Chapter 5 The Age of Industrialisation

Q.1. Explain the following :
(a) Woman workers in Britain attacked the Spinning Jenny. [CBSE Sept. 2011]
(b) In the seventeenth century, merchants from towns In Europe began employing peasants and artisans within the villages.
(c) The port of Surat declined by the end of the eighteenth century.
(d) The East India Company appointed Gomasthas to supervise the weavers in India. [CBSE Sept. 2011]
Ans.

(a) In Britain in the 19th century, the condition of workers was bad as mentioned below:

1. Abundance of labour affected the lives of the workers because the period of employment was less.
2. Sometimes the proportion of unemployment went upto between 35 and 75 per cent. The fear of unemployment made workers hostile to the introduction of new technology. When the Spinning Jenny was introduced in the woolen industry, women who survived on hand spinning began attacking the new machines because the machine speeded up the spinning process and reduced labour demand as by turning one single wheel a worker could set in motion a number of spindles and spin several threads at a time.
   This conflict over the introduction of Spinning Jenny continued for a long time.

(b) In the seventeenth century, merchants from towns in Europe began employing peasants and artisans within the villages due to following factors :

1. As a result of expansion of world trade and acquisition of colonies, demand for goods had increased significantly. The merchants, however, could not increase production in towns as the urban crafts and trade guilds were powerful. These were associations of producers that trained its people, maintained control over production, regulated competition and prices and restricted the entry of new people into the trade. Rulers granted different guilds the monopoly right to produce and trade in specific products. It was, therefore, difficult for new merchants to set up business in towns. So they turned to countryside.
2. In the countryside the conditions were favourable for them because in the countryside, with the disappearance of open fields and enclosure of common lands, the peasants were in search of alternative sources of income.
3. Many peasants had tiny plots of land which could not provide work for all members of the household.
4. The peasants agreed to do work for the merchants because it was beneficial for them too because they could remain in the countryside and could also cultivate their small plots of land. It enabled them to use full strength of their families as well.

(c) The port of Surat declined by the end of the eighteenth century due to the factors as mentioned below :

1. Before the age of machine industries, silk and cotton goods from India dominated the international market in textiles.
2. A vibrant sea trade operated through the main pre-colonial ports. Surat on the Gujarat coast connected India to the Gulf and Red Sea ports.
3. By the 1750s the network controlled by Indian merchants was breaking down as the European companies gradually gained power including concessions from the local courts as well as the monopoly rights to trade.
4. While Hoogly and Surat decayed, Bombay and Calcutta grew because now trade was carried through the new ports and was carried in European ships. As a result of it, many of the old trading houses collapsed. Thus, export from Surat fell dramatically. In the last years of the seventeenth century, the gross value of trade that passed through Surat had been ? 16 million by the 1740s, it declined to ? 3 million.

(d) The East India Company anointed gomastha to supervise weavers in India due to the 1 following factors : 
After establishing its political power in India, the company wanted to establish a monopoly ‘right to trade. It proceeded to develop a system of management and control that would eliminate competition, control costs and ensure regular supplies of cotton and silk goods. This it did through a series of steps.
The most important step was to eliminate the existing traders and brokers connected with the cloth trade and establish a more direct control over the weaver. It appointed a paid servant called the gomastha to supervise weavers, collect supplies and examine the quality of cloth.The weavers who had taken advances from the company had to handover the cloth they produced to the gomastha.

Q.2. Write True or False against each statement:
(a) At the end of the 19th century, 80 per cent of the total workforce in Europe was employed in the technologically advanced industrial sector.
(b) The international market for textiles was dominated by India till the eighteenth century.
(c) The American Civil War resulted in the reduction of cotton exports from India.
(d) The introduction of the fly shuttle enabled the handloom workers to improve their productivity.
Ans.
(a) False
(b) True
(c) False
(d) True

More Resources for CBSE Class 10

• NCERT Solutions
• NCERT Solutions for Class 10 Science
• NCERT Solutions for Class 10 Maths
• NCERT Solutions for Class 10 Social
• NCERT Solutions for Class 10 English
• NCERT Solutions for Class 10 Hindi
• NCERT Solutions for Class 10 Sanskrit
• NCERT Solutions for Class 10 Foundation of IT
• RD Sharma Class 10 Solutions

Q.3. Explain what is meant by proto industrialisation.
Ans.
Even before setting up the factories, there was large-scale industrial production for an international market. This was not based on factories. It is known as proto-industrialization. It was a part of a network of commercial exchanges. Merchants were based in towns but the t work was done mostly in the countryside.

Q.4. Why did some industrialists in the nineteenth century Europe prefer hand labour over machines? [CBSE Sept. 2010, 2011]
Ans. (i) Expensive new technology: New technologies and machines were expensive, so the pioducers and the industrialists were cautious about using them.
(ii) Costlier repair: The machines often
broke down and the repair was costly.
(iii) Less effective: They were not as effective as their inventors and manufacturers claimed.
(iv) Availability of cheap workers: Poor peasants and migrants moved to cities in large numbers in search of jobs. So the supply of workers was more than the demand. Therefore, workers were available at low wages.
(v) Uniform machine-made goods: A range of products could be produced only with hand labour. Machines were oriented to producing uniforms, standardized goods for a mass market. But the demand in the market was often for goods with intricate designs and specific shapes.
In the mid-nineteenth century. Britain, for instance. 500 varieties of hammers were produced, and 15 kinds of axes. This required human skill, not mechanical technology.

Q.5. How did the East India Company procure regular supplies of cotton and silk textiles from the Indian weavers ?
Ans. (i) Monopoly right : Once the East India Company established political power, it asserted a monopoly right to trade
(ii) New system : After establishing monopoly over trade :t proceeded to develop a system of management and control that would eliminate competition, control costs, and ensure regular supplies of cotton and silk goods. This it did through a series of steps.
(iii) Appointing Gomasthas : The Company tried to eliminate the existing traders and brokers connected with the doth trade, and establish a more direct control over the weavers. It appointed a paid secant called the Gomostha to supervise weavers, collect supplies, and examine the quality of cloth.
(iv) System of advances : To have a direct control over the weavers, the company- started the system of advances. Once an order was placed, the weavers were given loans to purchase the raw material for their production. Those, who took loans had to hand over the doth they produced to the Gomastha. They could not take it to any other trader.
(v) Use of power : The places where the weaver refused to cooperate the Company used its police. At many places weaver were often beaten and flogged for delays in supply.

Q.6. Imagine that you have been asked to write an article for an encylopedia on Britain and the history of cotton. Write your piece using information from the entire chapter.
Ans. Self- explanatory.

Q.7. Why did the industrial production in India increase during the First World War ? [CBSE Sept. 2011]
Ans. Ans. (i) Decline of Manchester : With British mills busy with war production to meet the needs of the army. Manchester imports into India declined.
(ii) Increase in demand : With the decline of imports suddenly. Indian mills had a vast home market to supply.
(iii) Demand from army : As the War prolonged. Indian factories were called upon to supply war need;i.e.. jute bags, doth for the army uniforms, tents and leather boots, horse and mule saddles, and a host of other items.
(iv) New factories : New factories were set up. and old ones ran multiple shifts. Many new workers were employed, and everyone was made to work for longer hours. Over the war years, industrial production boomed.
(v) Downfall of British industry and boon for home industry : After the war Manchester could never recapture its old position in the Indian market. Unable to modernise and compete with the US. Germany and Japan, the economy of Britain crumbled after the war. Cotton production collapsed and exports of cotton cloth from Britain fell dramatically. Within the colonies, local industrialists gradually consolidated their position, substituting foreign manufactures and capturing the home market.

Multiple Choice Questions

1. The person who got people from village, ensured them jobs, helped them settle in cities and provided them money is times of need was known as: [CBSE (CCE) 2011]
(a) Stapler
(b) Fuller
(c) Gomastha
(d) Jobber

2. Where was the first Indian Jute mill set up? [CBSE (CCE) 2011]
(a) Bengal
(b) Bombay
(c) Madras
(d) Bihar

3. In 1911, 67 percent of the large industries were located in which one of the following places in India? [CBSE (CCE) 2011]
(a) Bengal and Bombay
(b) Surat and Ahmedabad
(c) Delhi and Bombay
(d) Patna and Lucknow

4. Whom did the British government appoint to supervise weavers collect supplies and to examine the quality of cloth? [CBSE (CCE) 2011]
(a) Jobber
(b) Sepoy
(c) Policemen
(d) Gomastha

5. Indian Industrial growth increased after the First World War because
(a) Indian mills now had a vast home market to supply.
(b) British opened new factories in India.
(c) New technological changes ocurred.
(d) India became independent.

6. Which of the following helped the production of handloom cloth production?
(a) Technological changes
(b) Import duties
(c) Imposition of export dirties
(d) Government regulations

7. Why did the weavers suffer from a problem of raw cotton?
(a) The cotton crop perished
(b) Raw cotton exports increased
(c) Local markets shrank
(d) Export market collapsed.

8. In early 20th century handloom cloth production increased because
(a) factories were set up.
(b) new technology like looms with flying shuttle were introduced.
(c) merchants invested more capital in industry.
(d) demand for handloom increased.

9. How did the Indian weavers and merchants resist colonial control ?
(a) They went on strike to protest
(b) Decided to form guilds
(c) Demanded tariff protection and tried to create new market for the new produce
(d) Migrated to other place to look for new markets.

10. At which place did the first spinning and weaving mill set up in 1874 ?
(a) Kanpur
(b) Bombay
(c) Calcutta
(d) Madras

11. Why were there frequent clashes between the gomastha and the weavers ?
(a) The weavers hated foreigners.
(b) The gomastha forced the weavers to sell goods at a dictated price.
(c) Gomasthas were outsiders without long term social link with the village.
(d) None of the above.

12. Why were workers in England hostile to machines and new technology ?
(a) They did not know how to use these.
(b) They feared that they would lose their jobs and livelihood.
(c) The workers were too poor to buy new machines.
(d) They were scared of machines.

13. Indian handmade goods could not compete with the British machine made goods because
(a) these handmade goods were not of good quality.
(b) machine made goods were cheaper than hand made goods.
(c) hand made goods were not easily available.
(d) hand made goods were not appealing to them.

14. Which of the following was a European managing agency ?
(a) Tata Iron and Steel Company
(b) Andrew Yule
(c) Elgin Mill
(d) Birla industries

15. The main function of the jobber was to
(a) create jobs for the industrialists.
(b) get new recruits for the industrialists.
(c) help the middleman to get artisans for the company.
(d) to advise the company on the issues related to the weavers.

16. Which of the following innovations helped the weavers in increasing productivity and compete with mill sector ?
(a) Spining jenny
(b) Flying shuttle
(c) Cotton Gin
(d) Roller

17. By late 19th century why did the British manufacturers print calendars for advertisements ?
(a) Indian people were fond of using calendars in their houses.
(b) Unlike newspapers and magazines, calendars were used even by people who did not know how to read or write.
(c) It was cheaper to advertise goods through calendars.
(d) It used to add beauty to the room.

18. In 20th century handloom cloth production expanded steadily because
(a) handloom material was cheaper.
(b) Indians preferred the handloom material.
(c) intricate design of handloom cloth could not easily be copied by the mills.
(d) using handloom material created national feeling.

19. Why did Manchester export to India decline after the first world war ?
(a) People were busy fighting the war.
(b) Factories closed down due to security problem.
(c) Factories and mills were busy producing goods to fulfil the need of army.
(d) Export trade was restricted by the government.

20 In Victorian Britain the ujiper classes-aristocratic class and bourgeoisie preferred handmade goods because
(a) they were made from imported material.
(b) the handmade goods came to symbolise refinement and class.
(c) they were better finished.
(d) only upper class could afford the expensive items.

21. Why were advertisements used to sell products in 18th century ? Mark the most important factor
(a) To help the consumer in choosing the products.
(b) To popularise the products by using pictures of gods and goddesses.
(c) To make the products look good and desirable.
(d) All the above

22. Nationalist Indian manufacturers used advertisement
(a) to impress the people
(b) to make Indian goods popular
(c) to use advertisement as a vehicle for spreading the message of Swadeshi
(d) to increase sale of products

23. Strike the odd one out from the following option. European managing companies were interested in in-vesting in
(a) Mining
(b) Rice production
(c) Jute
(d) Indigo

24. From which of the following trade did the early entrepreneurs make a fortune ?
(a) Textile trade
(b) China trade
(c) Trade in tea
(d) Industries

ANSWERS

Class 11 Geography Notes Chapter 13 Water (Oceans)

It is said that water is life. Water is an essential component of all life forms that exist over the surface of the earth.

Water is a cyclical resource. It can be used and reused in the form of a cycle. Water keeps on moving from the ocean to land and land to ocean.

The hydro logical cycle describes the movement of water on, in, and above the earth. The water cycle has been working for billions of years and all the life on earth depends on it.

The distribution of water on earth is quite uneven. Many locations have plenty of water while others have very limited quantity.

The hydro logical cycle, is the circulation of water within the earth’s hydrosphere in different forms i.e, the liquid, solid and the gaseous phases.

About 71 per cent of the planetary water is found in the oceans. The remaining is held as freshwater in glaciers and ice caps, groundwater sources, lakes, soil moisture, atmosphere, streams and within life.

Nearly 59 per cent of the water that falls on land returns to the atmosphere through evaporation from over the oceans as well as from other places. The remainder runs-off on the surface, infiltrates into the ground or a part of it becomes glacier.

The geographers have divided the oceanic part of the earth into five oceans, namely the Pacific, the Atlantic, the Indian, Southern ocean and the Arctic.

The floors of the oceans are rugged with the world’s largest mountain ranges, deepest trenches and the largest plains. These features are formed, like those of the continents, by the factors of tectonic, volcanic and depositional processes.

The ocean floors can be divided into four major divisions:

• the Continental Shelf;
• the Continental Slope;
• the Deep Sea Plain;
• the Oceanic Deeps.

Besides, these divisions there are also major and minor relief features in the ocean floors like ridges, hills, sea mounts, guyots, trenches, canyons, etc.

The continental shelf is the extended margin of each continent occupied by relatively shallow seas and gulfs. It is the shallowest part of the ocean showing an average gradient of 1° or even less.

The Siberian shelf in the Arctic Ocean, the largest in the world, stretches to 1,500 km in width. The depth of the shelves also varies. It may be as shallow as 30 m in some areas while in some areas it is as deep as 600 m.

The continental slope connects the continental shelf and the ocean basins. It begins where the bottom of the continental shelf sharply drops off into a steep slope. The gradient of the slope region varies between 2-5°. The depth of the slope region varies between 200 and 3,000 m.

Deep sea plains are gently sloping areas of the ocean basins. These are the flattest and smoothest regions of the world. The depths vary between 3,000 and 6,000 m. These plains are covered with fine-grained sediments like clay and silt.

Oceanic Deeps or Trenches are the deepest parts of the oceans. The trenches are relatively • steep sided, narrow basins. They are some 3-5 km deeper than the surrounding ocean floor.

A mid-oceanic ridge is composed of two chains of mountains separated by a large depression. The mountain ranges can have peaks as high as 2,500 m and some even reach above the ocean’s surface. Iceland, a part of the mid- Atlantic Ridge, is an example.

The average temperature of surface water of the oceans is about 27°C and it gradually decreases from the equator towards the poles. The rate of decrease of temperature with increasing latitude is generally 0.5 CC per latitude.

The average salinity of the Indian Ocean is 35%. The low salinity trend is observed in the Bay of Bengal due to influx of river water. On the contrary, the Arabian Sea shows higher salinity due to high evaporation and low influx of fresh water.

The salinity fluctuates from 0 – 35%, seasonally. In hot and dry’ regions, v’here evaporation is high, the salinity sometimes reaches to 70%. The salinity variation in the Pacific Ocean is mainly due to its shape and larger areal extent. Salinity decreases from 35% — 31% on the western parts of the northern hemisphere because of the influx of melted water from the Arctic region.

Class 11 Geography Notes Chapter 13 Important Terms:

• Continent shelf: The continental shelf is the extended margin of each continent occupied by relatively shallow seas and gulfs. It is the shallowest part of the ocean showing an average gradient of 1° or even less.
• Thermocline: The boundary region, from where there is a rapid decrease of temperature, is called the thermocline.
• Trenches: These areas are the deepest parts of the oceans. The trenches are relatively steep sided, narrow basins. They are some 3-5 km deeper than the surrounding ocean floor.
• Mid-oceanic ridges: A mid-oceanic ridge is composed of two chains of mountains separated by a large depression. The
• mountain ranges can have peaks as high as 2,500 m and some even reach above the ocean’s surface.
• Continental slope: The continental slope connects the continental shelf and the ocean basins. It begins where the bottom of the continental shelf sharply drops off into a steep slope. The gradient of the slope region varies between 2-5°.
• Seamount: It is a mountain with pointed summits, rising from the seafloor that does not reach the surface of the ocean. Seamounts are volcanic in origin. These can be 3,000 — 4,500 m tall.
• Shelf break: The shelf typically ends at a very steep slope, called the shelf break.
• Submarine canyons: These are deep valleys, some comparable to the Grand Canyon of the Colorado river. They are sometimes found cutting across the continental shelves and slopes, often extending from the mouths of large rivers. The Hudson Canyon is the best known submarine canyon in the world.
• Guyot: It is a flat topped seamount. It shows evidences of gradual subsidence through stages to become flat topped submerged mountains. It is estimated that more than 10,000 seamounts and guyots exist in the Pacific Ocean alone.
• Water cycle: All living organisms, the atmosphere and the lithosphere maintain between them a circulation of water in solid, liquid or gaseous form referred to as the water or hydro-logic cycle.
• Atoll: These are low islands found in the tropical oceans consisting of coral reefs surrounding a central depression. It may be a part of the sea (lagoon), or sometimes form enclosing a body of fresh, brackish, or highly saline water.
• Salinity: Salinity is the term used to define the total content of dissolved salts in sea water. It is calculated as the amount of salt (in gm) dissolved in 1,000 gm (1 kg) of seawater.
• Halocline: It is a distinct zone where salinity increases sharply.

Class 11 Geography Notes