Accountancy Class 12 Chapter 3 Questions and Answers - Free PDF Download
In Ncert Solutions Class 12 Accountancy Company Accounts And Analysis Of Financial Statements Chapter 3, you’ll get to understand how companies prepare their financial statements, like the Balance Sheet and Statement of Profit and Loss. This chapter makes topics like assets, liabilities, and shareholders’ funds simple by breaking everything down step by step. With Vedantu’s clear solutions, all those tricky terms and formats start to feel much easier.
Table of Content
If you ever get confused about how to present figures, understand schedule formats, or even calculate important financial ratios, this page will help. You can also download free PDF solutions and use them for quick revision anytime. Don’t forget to check your CBSE Class 12 Accountancy syllabus for a complete overview of what’s expected in your exam.
Studying with these NCERT Solutions from Vedantu means preparing smarter for your boards. For extra help on other chapters, explore more NCERT Solutions for Class 12 Accountancy on Vedantu. This chapter is really important if you want to score well in your Accountancy paper!
FAQs on NCERT Solutions For Class 12 Accountancy Chapter 3 Financial Statements Of A Company - 2025-26
1. How do the NCERT Solutions for Class 12 Accountancy Chapter 3 explain the correct format of a company's Balance Sheet?
The NCERT Solutions for Chapter 3 provide a step-by-step guide to preparing the Balance Sheet strictly as per Schedule III (Part I) of the Companies Act, 2013. The solutions demonstrate the correct vertical format, detailing the placement of:
- Major heads like Equity and Liabilities (including Shareholders' Funds, Non-Current Liabilities, Current Liabilities) and Assets (including Non-Current Assets, Current Assets).
- Sub-heads under each major head, ensuring every item from the textbook question is correctly classified.
- Clear references to Notes to Accounts for detailed calculations, which is a mandatory part of the presentation.
2. What is the step-by-step method shown in the NCERT Solutions for preparing a Cash Flow Statement?
The NCERT Solutions for this chapter illustrate the preparation of a Cash Flow Statement using the indirect method, as prescribed by the CBSE 2025-26 syllabus. The steps detailed in the solutions include:
- Calculating Net Profit before Tax and Extraordinary Items as the starting point.
- Adjusting for non-cash and non-operating items to find Operating Profit before Working Capital Changes.
- Showing adjustments for changes in Current Assets and Liabilities to arrive at Cash Flow from Operating Activities.
- Separately calculating and presenting Cash Flow from Investing Activities and Cash Flow from Financing Activities.
- Concluding with the net increase or decrease in cash and cash equivalents for the period.
3. How do the solutions for Chapter 3 explain the calculation of different accounting ratios for a given problem?
The solutions methodically solve problems on ratio analysis by:
- Clearly stating the formula for each required ratio (e.g., Debt-Equity Ratio = Debt / Equity).
- Identifying the correct figures for the numerator and denominator from the provided financial statements in the NCERT exercise.
- Showing the complete calculation and presenting the final answer in the correct format (e.g., pure ratio, percentage, or times).
- This ensures students understand both the formula and its practical application as per the textbook questions.
4. What is the correct way to present 'Notes to Accounts' as demonstrated in the NCERT Chapter 3 solutions?
The NCERT Solutions for Chapter 3 emphasise the importance of 'Notes to Accounts' as an integral part of the financial statements. The solutions show how to correctly prepare them by:
- Giving each note a specific number that corresponds to a line item in the Balance Sheet or Statement of Profit and Loss.
- Providing detailed breakdowns for items like Share Capital, Reserves and Surplus, Long-term Borrowings, and Property, Plant and Equipment.
- Ensuring the final total of each note matches the figure shown on the face of the financial statements, demonstrating the linkage.
5. How do the detailed steps in NCERT Solutions for Chapter 3 help prevent common errors in financial statement analysis?
By providing a clear, step-by-step methodology, the NCERT solutions help students avoid common mistakes. For instance:
- In ratio analysis, the solutions ensure correct items are picked for formulas, preventing the misclassification of current vs. non-current items.
- For cash flow statements, they highlight the correct treatment of items like depreciation (added back in operating activities) and sale of fixed assets (shown under investing activities), which are frequent points of error.
- The emphasis on following the Schedule III format correctly prevents marks deduction for presentation errors in board exams.
6. When solving a comparative statement problem from the NCERT textbook, what is the most critical step that the solutions highlight?
In problems involving comparative statements, the NCERT solutions highlight that the most critical step is the correct calculation of both the Absolute Change (Current Year Figure - Previous Year Figure) and the Percentage Change (Absolute Change / Previous Year Figure × 100). The solutions meticulously show this four-column presentation, ensuring students use the previous year's figure as the base for the percentage calculation, which is a common area of confusion.
7. Why is it important to follow the exact sequence of activities (Operating, Investing, Financing) as shown in the NCERT solutions for the Cash Flow Statement?
Following the prescribed sequence of Operating, Investing, and Financing activities is crucial because it aligns with Accounting Standard (AS) 3 and the Companies Act, 2013. The NCERT solutions strictly adhere to this sequence to help users of financial statements clearly understand how a company generated and used its cash from its principal business operations, investments, and financing sources respectively. This structured presentation is mandatory for CBSE board exams and ensures full marks for correctness and compliance.
8. How do the NCERT solutions for Chapter 3 solve problems related to preparing a Common-Size Statement of Profit and Loss?
The solutions demonstrate the correct method by first laying out the Statement of Profit and Loss in the prescribed vertical format as per Schedule III. Then, each item (e.g., Cost of Materials Consumed, Employee Benefit Expenses) is expressed as a percentage of 'Revenue from Operations'. The solutions provide a clear columnar format showing the absolute amounts and the corresponding percentages, making it easy to analyse the composition of expenses and profits relative to sales.
