NCERT Solution For Class 12 Accountancy Chapter 3 Financial Statements Of A Company

Q:

State the meaning of financial statements?

A:

Financial statements are the basic and formal annual reports through which the corporate management communicates financial information to its owners and various external parties. These normally refer to the Balance Sheet and the Statement of Profit and Loss of a company.

Q:

Explain the nature of the financial statements.

A:

The following points explain the nature of financial statements:

  1. Recorded Facts: Financial statements are prepared on the basis of facts in the form of cost data recorded in accounting books. The original cost or historical cost is the basis of recording transactions. The figures of various accounts such cash, bank, trade receivables, fixed assets etc. are taken as per the figures recorded in accounting books.
  2. Accounting Conventions: Certain accounting conventions are followed while preparing financial statements. The convention of valuing inventory at cost or market price whichever is lower is followed. The valuing of assets at cost less depreciation principle for balance sheet purpose is followed. The convention of materiality is followed in dealing in dealing with small items like pens, postage stamps, staplers etc. The use of accounting conventions makes financial statements comparable, simple and realistic.
  3. Postulates: Financial statements are prepared on certain basic assumptions known as postulates such as going concern postulate, money measurement postulate, realisation postulate etc. Going concern postulate assumes that the enterprise is treated as a going concern and exists for a longer period of time. While preparing statement of profit and loss the revenue is included in sales of the year in which the sale was undertaken even though the sale price may be received in the next year. The assumption is known as realisation postulate.
  4. Personal Judgements: Facts and figures presented through financial statements are based on personal opinion, estimates and judgements. The depreciation is provided taking into consideration the useful economic life of the asset. Provisions for doubtful debts are made on estimates and personal judgement. Personal opinion, judgements and estimates are made while preparing financial statements to avoid any possibility of over statement of assets and liabilities, income and expenditure, keeping in mind the convention of conservatism.

Q:

State the importance of financial statements to:
  1. Shareholders.
  2. Creditors.
  3. Government.
  4. Investors.

A:

  1. Shareholders: They want to know about the profitability and future prospects of the business enterprise. The required information is available from the financial statements.
  2. Creditors: They want to ensure themselves, whether their funds are safe and secured and the business is capable of making payment of interest regularly and also return as per agreement.
  3. Government: Financial statements help government in determining tax liability. The government is also capable of ascertaining the economic development of the country.
  4. Investors: They would like to know, how far their previous investment has been safe and how much new investment will be safer and secured.

Q:

List any three objectives of financial statements?

A:

The primary objective of financial statements is to assist the users in their decision making. The specific objectives include the following:

  1. To provide information about economic resources and obligations of a business.
  2. To provide information about the earning capacity of the business.
  3. To judge the effectiveness of management.

Q:

What are limitations of financial statements?

A:

Following are the important limitations of financial statements:

  1. Financial statements are prepared on the basis of historical cost. Hence they do not reflect current situation.
  2. Vital information is missing in the financial statements like information relating to loss of markets, cessation of agreements, etc. which have vital bearing on the enterprise.
  3. Accounting is done on the basis of certain conventions. Some of the assets may not realise the stated values, as they are shown in the Balance Sheet at the unexpired cost.

Q:

Brinda Ltd. has furnished the following information: 25,000, 10% debentures of ₹100 each; Bank loan of ₹10,00,000 repayable after 5 years; Interest on debentures is yet to be paid. Show the above items in the balance sheet of the company as at March 31, 2017.

A:

Balance Sheet (Extract)

Particulars

Note no.

I. Equity and Liabilities

 

 

1. Non-current Liabilities

 

 

Long-term Borrowings

1

35,00,000

2. Current Liabilities

 

 

Other Current Liabilities

2

2,50,000

 

Notes to Accounts:

Particulars

1. Long-term Borrowings

 

25,000 10% debentures of ₹100 each

25,00,000

Bank loan

10,00,000

 

35,00,000

2. Other Current Liabilities

 

Interest accrued and due on debentures

2,50,000

Q:

From the following information prepare the balance sheet of Jam Ltd.
  • Inventories ₹7,00,000;
  • Equity share capital ₹16,00,000;
  • Plant and Machinery ₹8,00,000;
  • 8% Preference share capital ₹6,00,000;
  • General reserve ₹6,00,000;
  • Bills payable ₹1,50,000;
  • Provision for taxation ₹2,50,000;
  • Land & Building ₹16,00,000;
  • Non-current Investment ₹10,00,000;
  • Cash at Bank ₹5,00,000;
  • Creditors ₹2,00,000;
  • 12% Debentures ₹12,00,000;

A:

Balance Sheet as on….

Particulars

Note no.

     ₹

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

(a) Share Capital

1

22,00,000

(b) Reserves and Surplus

2

6,00,000

2. Non-current Liabilities

 

 

(a) Long-term Borrowings

3

12,00,000

3. Current Liabilities

 

 

(a) Trade Payables  

4

3,50,000

(b) Short-term Provisions

5

2,50,000

Total

 

46,00,000

II Assets

 

 

1.  Non-current Assets

 

 

(a) Fixed Assets

 

 

Tangible Assets

6

24,00,000

(b) Non-current Investment

7

10,00,000

2. Current Assets

 

 

(a) Inventories

8

7,00,000

(b) Cash and Cash Equivalents

9

5,00,000

Total

 

46,00,000


Notes to Accounts:

Particulars

    ₹

1. Share Capital

 

Equity share capital 

16,00,000

 

8% Preference share capital

6,00,000

22,00,000

2. Reserves and Surplus

 

 

General Reserve 

6,00,000

3. Non-current Liabilities

 

 

Long-term Borrowings

 

12% Debentures

12,00,000

4. Trade Payables  

 

Sundry Creditors

2,00,000

 

Bills Payable

1,50,000

3,50,000

5. Short-term Provision   

 

Provision for tax

2,50,000

6. Tangible Assets

 

Land & Building 

16,00,000

 

Plant and Machinery 

8,00,000

24,00,000

7. Non-current Investment

10,00,000

8. Inventories

7,00,000

9. Cash and Cash Equivalents

 

Cash at Bank

5,00,000

Q:

Explain the process of preparing income statement and balance sheet.

A:

The process of preparing income statement (or statement of profit and loss) is given below in chronological order:

  1. Prepare a trial balance on the basis of the balances of various accounts in the ledger.
  2. Record Revenue from Operations i.e. sales less returns.
  3. Add other incomes to Revenue from Operations to ascertain Total Revenue.
  4. Deduct total expenses of the company from Total Revenue to ascertain profit before tax.
  5. Deduct tax paid by the company from profit before tax to ascertain profit or loss for the period.

The process of preparing Balance Sheet of a company is as follows:

  1. The Balance Sheet of a company is prepared in two parts ‘Equities and Liabilities’ and ‘Assets’.
  2. Under the head ‘Equities and Liabilities’, Shareholders’ Funds, Share Application Money Pending Allotment, Non-current Liabilities and Current Liabilities are recorded.
  3. Under the head Assets, Non-current Assets and Current Assets are recorded.
  4. At the end total of two heads is ascertained, which must be equal.

Q:

Financial statements reflect a combination of recorded facts, accounting conventions and personal judgements discuss.

A:

  1. Recorded Facts: Financial statements are prepared on the basis of facts in the form of cost data recorded in accounting books. The original cost or historical cost is the basis of recording transactions. The figures of various accounts such cash, bank, trade receivables, fixed assets etc. are taken as per the figures recorded in accounting books.
  2. Accounting Conventions: Certain accounting conventions are followed while preparing financial statements. The convention of valuing inventory at cost or market price whichever is lower is followed. The valuing of assets at cost less depreciation principle for balance sheet purpose is followed. The convention of materiality is followed in dealing in dealing with small items like pens, postage stamps, staplers etc. The use of accounting conventions makes financial statements comparable, simple and realistic.
  3. Postulates: Financial statements are prepared on certain basic assumptions known as postulates such as going concern postulate, money measurement postulate, realisation postulate etc. Going concern postulate assumes that the enterprise is treated as a going concern and exists for a longer period of time. While preparing statement of profit and loss the revenue is included in sales of the year in which the sale was undertaken even though the sale price may be received in the next year. The assumption is known as realisation postulate.
  4. Personal Judgements: Facts and figures presented through financial statements are based on personal opinion, estimates and judgements. The depreciation is provided taking into consideration the useful economic life of the asset. Provisions for doubtful debts are made on estimates and personal judgement. Personal opinion, judgements and estimates are made while preparing financial statements to avoid any possibility of over statement of assets and liabilities, income and expenditure, keeping in mind the convention of conservatism.

Q:

Explain how financial statements are useful to the various parties who are interested in the affairs of an undertaking?

A:

  1. Shareholders: They want to know about the profitability and future prospects of the business enterprise. The required information is available from the financial statements.
  2. Management: The management needs information regarding profitability, operational efficiency, and financial soundness of the business, so that weak points of the business may be identified and effective measures can be taken.
  3. Creditors: They want to ensure themselves, whether their funds are safe and secured and the business is capable of making payment of interest regularly and also return as per agreement.
  4. Government: Financial statements help government in determining tax liability. The government is also capable of ascertaining the economic development of the country.
  5. Investors: They would like to know, how far their previous investment has been safe and how much new investment will be safer and secured.
  6. Employees: They get increment and bonus on the basis of their productivity and profitability of the business.

Q:

Explain the limitations of financial statements.

A:

Though utmost care is taken in the preparation of the financial statements and provide detailed information to the users, they suffer from the following limitations:

  1. Do not reflect current situation: The items recorded in the financial statements reflect their original cost i.e. the cost at which they were acquired. Financial statements also fail to record the inflation effect.
  2. No qualitative information: Financial statements contain only monetary information but not qualitative information like current economic environment, industrial relation, labour relation, quality of management etc.
  3. Biased: Financial statements are based on the personal judgements regarding the use of the methods for charging depreciation, amount of provision for doubtful debts, methods of valuation of inventory etc.
  4. Only Summary: Financial statements show aggregate information but not detailed information. Hence they may not be of great help in decision making.
  5. Some important information missing: Financial statements do not disclose information relating to loss of markets, and cessation of agreement, which have vital impact on the business.

Q:

Explain in detail about the significance of the financial statements.

A:

The importance and significance of financial statements are as follows:

  1. Report on stewardship function: Financial statements report the performance of the management to the shareholders. The gaps between the management performance and ownership expectations can be understood with the help of financial statements.
  2. Basis for fiscal policies: The financial statements provide the basic input for industrial, taxation and other economic policies of the government.
  3. Basis for granting of credit: Credit granting institutions take decisions based on the financial performance of the business.
  4. Guide to the value of investment already made: Shareholders of the companies are interested in knowing the status, safety and return on their investment.
  5. Basis for prospective investors: Their prime concern in their investment decisions are security and liquidity of their investment with reasonable profitability. Financial statements help the investors to assess long-term and short-term solvency as well as the profitability of the concern.
  6. Aids trade associations in helping their members: Trade associations may analyse the financial statements for the purpose of providing service and protection to their members.

Q:

How will you disclose the following items in the Balance Sheet of a company?
i. Current assets, Inventory
ii. Contingent liabilities and notes to accounts
iii. Shareholders’ funds, Reserve and surplus
iv. Fixed assets, intangible assets
v. Proposed dividend for the current year
vi. Non-current liabilities
vii. Arrears of dividend on cumulative preference shares

A:

i. Current assets are shown on the assets part of the balance sheet. Inventory is shown under the head Current Assets and sub head inventories.
ii. Contingent liability is not recorded in the books of accounts but is disclosed in the notes to accounts for the information of the users. It includes:
Claim against the company not acknowledge as debts;
Proposed Dividend (Current Year).
iii. Shareholders’ funds are shown in the Equity and Liabilities part of the balance sheet. Reserves and Surplus are shown under the head shareholders’ fund.
iv. Fixed Assets are shown under the head Non- Current Assets. Intangible Assets are shown under the head Non- Current Assets and Sub- heads Fixed Assets.
v. Proposed Dividend for the current year is treated as a Contingent Liability and shown in the notes to Accounts.
vi. Non-Current liabilities are shown in the Equity and Liabilities part of the Balance sheet.
vii. Arrears of dividend on cumulative preference shares are sown as ‘Commitments in Notes to Account’.

 

Q:

Prepare a balance sheet of Black Swan Ltd. as at March 31, 2017 from the following information:
Particulars
General Reserve 3,000
10% Debentures 3,000
Balance in Statement of P & L 1,200
Depreciation on fixed assets 700
Gross Block 9,000
Current liabilities 2,500
Preliminary expenses 300
6% Preference Share Capital 5,000
Cash & Cash Equivalents 6,100

A:

Balance Sheet

Particulars

Note no.

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

(a) Share Capital

1

5,000

(b) Reserves and Surplus

2

4,200

2. Non-current Liabilities

 

 

(a) Long-term Borrowings

3

3,000

3. Current Liabilities

 

 

(a) Other Current Liabilities

4

2,500

Total

 

14,700

II Assets

 

 

1.  Non-current Assets

 

 

(a) Fixed Assets

 

 

Tangible Assets

5

8,300

2. Current Assets

 

 

(a) Cash and Cash Equivalents

6

6,100

(b) Other Current Assets

7

300

Total

 

14,700

 

Notes to Accounts:

Particulars

1. Share Capital

 

6% Preference Share Capital

5,000

2. Reserves and Surplus

 

 

General Reserve 

3,000

 

Balance in Statement of P & L 

1,200

4,200

3. Non-current Liabilities

 

 

Long-term Borrowings

 

10% Debentures

3,000

4. Other Current Liabilities

 

Current Liabilities

 

2,500

5. Tangible Assets

 

Gross Block   

9,000

 

Less: Depreciation   

700

8,300

6. Cash and Cash Equivalents

6,100

7. Other Current Assets

 

 Preliminary Expenses 

300

Q:

Prepare the balance sheet of Jyoti Ltd, as at March 31, 2017 from the following information
  • Building ₹10,00,000;
  • Investments in the shares of Metro Tyres Ltd. ₹3,00,000;
  • Stores and Spares ₹1,00,000;
  • Statement of Profit and Loss (Dr.) ₹90,000;
  • 50,000 equity shares of ₹20 each fully paid-up;
  • Capital Redemption Reserve ₹1,00,000;
  • 10% Debentures ₹3,00,000;
  • Unpaid dividends ₹90,000;
  • Share options outstanding account ₹10,000.
  • Other current asset `10,000.

A:

Balance Sheet

Particulars

Note no.

     ₹

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

(a) Share Capital

1

10,00,000

(b) Reserves and Surplus

2

10,000

2. Non-current Liabilities

 

 

(a) Long-term Borrowings

3

3,00,000

3. Current Liabilities

 

 

(a) Other Current Liabilities

4

1,00,000

Total

 

14,10,000

II Assets

 

 

1.  Non-current Assets

 

 

(a) Fixed Assets

 

 

Tangible Assets

5

10,00,000

(b) Non-current Investment

6

3,00,000

2. Current Assets

 

 

(a) Inventories

7

1,00,000

(b) Other Current Assets

8

10,000

Total

 

14,10,000

 

Notes to Accounts:

Particulars

      ₹

1. Share Capital

 

Equity share capital 

 

10,00,000

50,000 equity shares of `20 each fully paid-up

 

2. Reserves and Surplus

 

 

Capital Redemption Reserve   

1,00,000

 

Statement of P&L (Dr.)

(90,000)

10,000

Shares Options Outstanding Account

10,000

 

3. Non-current Liabilities

 

 

Long-term Borrowings

 

10% Debentures

3,00,000

4. Other Current Liabilities   

 

Unpaid dividends  

90,000

 

Share Option Outstanding

10,000

1,00,000

5. Tangible Assets

 

Building 

 

10,00,000

6. Non-current Investment

 

Investments in the shares of Metro Tyres Ltd.

3,00,000

7. Inventories

 

Stores and Spares

1,00,000

8. Other Current Assets

10,000

 

 

Note: There is a misprint in the book. The number of equity shares issued must be 50,000 so that both the sides of the Balance Sheet stand equal.

Q:

From the following information, prepare the balance sheet of Gitanjali Ltd.
  • Inventories ₹14,00,000;
  • Equity share capital ₹20,00,000;
  • Plant and Machinery ₹10,00,000;
  • Preference share capital ₹12,00,000;
  • Debenture Redemption Reserve ₹6,00,000;
  • Outstanding expenses ₹3,00,000;
  • Proposed dividend ₹5,00,000;
  • Land & Building ₹20,00,000;
  • Current Investment ₹8,00,000;
  • Cash equivalent ₹10,00,000;
  • Short term loan from Zaveri Ltd (a subsidiary company of Twilight Ltd) ₹4,00,000;
  • Public Deposits ₹12,00,000.

A:

Balance Sheet

Particulars

Note no.

I. Equity and Liabilities

 

 

1. Shareholders’ Funds

 

 

(a) Share Capital

1

32,00,000

(b) Reserves and Surplus

2

6,00,000

2. Non-current Liabilities

 

 

(a) Long-term Borrowings

3

12,00,000

3. Current Liabilities

 

 

(a) Short-term Borrowings

4

4,00,000

(b) Other Current Liabilities

5

3,00,000

(c) Short-term Provisions

6

5,00,000

Total

 

62,00,000

II Assets

 

 

1.  Non-current Assets

 

 

(a) Fixed Assets

 

 

Tangible Assets

7

30,00,000

2. Current Assets

 

 

(a) Current Investments

8

8,00,000

(b) Inventories

9

14,00,000

(c) Cash and Cash Equivalents

10

10,00,000

Total

 

62,00,000

 

Notes to Accounts:

Particulars

1. Share Capital

 

Equity share capital 

20,00,000

 

Preference share capital

12,00,000

32,00,000

2. Reserves and Surplus

 

 

Debenture Redemption Reserve 

6,00,000

3. Non-current Liabilities

 

 

Long-term Borrowings

 

Public Deposits 

12,00,000

4. Short-term Borrowings

 

Short term loan from Zaveri Ltd (a subsidiary company of Twilight Ltd)

4,00,000

5. Other Current Liabilities

 

Outstanding expenses 

3,00,000

6. Short-term Provisions

 

Proposed dividend 

5,00,000

7. Tangible Assets

 

Land & Building 

20,00,000

 

Plant and Machinery 

10,00,000

30,00,000

8. Current Investment

8,00,000

9. Inventories

14,00,000

10. Cash and Cash Equivalents

10,00,000

Q:

On 1st April, 2017, Jumbo Ltd. issued 10,000; 12% debentures of ₹100 each a discount of 20%, redeemable after 5 years. The company decided to write-off discount on issue of such debentures on March 31, 2018. Show the items in the balance sheet of the company immediately after the issue of these debentures.

A:

Balance Sheet as at….

Particulars

Note no.

I. Equity and Liabilities

 

 

1. Non-current Liabilities

 

 

Long-term Borrowings

1

10,00,000

Total

 

10,00,000

II Assets

 

 

Current Assets

 

 

1. Cash and Cash Equivalents

3

8,00,000

2. Other Current Assets

4

2,00,000

Total

 

10,00,000


Notes to Accounts:

Particulars

1. Long-term Borrowings

 

10,000 12% debentures of 100 each

10,00,000

2. Cash and Cash Equivalents

 

Cash at Bank

8,00,000

3. Other Current Assets

 

Disc. on issue of debentures (unamortised)

2,00,000

(To be written off within 12 months from the date of Balance Sheet)

 

Q:

Show the following items in the balance sheet as per the provisions of the Companies Act, 2013 in Schedule III:
Particulars Particulars
Preliminary Expenses 2,40,000 Goodwill 30,000
Discount on issue of shares 20,000 Loose tools 12,000
10% Debentures 2,00,000 Motor Vehicles 4,75,000
Stock in trade 1,40,000 Provision for tax 16,000
Cash at bank 1,35,000
Bills receivable 1,20,000

A:

Balance Sheet (Extract)

Particulars

Note no.

I. Equity and Liabilities

 

 

1. Non-current Liabilities

 

 

Long-term Borrowings

1

2,00,000

2. Current Liabilities

 

 

a. Short-term Provisions

2

16,000

II Assets

 

 

1. Non-Current Assets

 

 

a. Fixed Assets

 

 

Tangible Assets

3

4,75,000

Intangible Assets

4

30,000

b. Other Non-Current Assets

 

 

2. Current Assets

 

 

a. Inventories

5

1,52,000

b. Bill receivables

6

1,20,000

c. Cash and Cash Equivalents

7

1,35,000

d. other Current Assets

8

2,60,000

 

Notes to Accounts:

Particulars

1. Long-term Borrowings

 

10% debentures

2,00,000

2. Short-term Provisions

 

Provision for taxation

16,000

3. Fixed Assets

 

Tangible Assets

 

Motor Vehicles

4,75,000

Intangible Assets

 

Goodwill

30,000

4. Other Non-current Assets  

 

Preliminary expenses

2,40,000

 

Disc. on issue of debentures    

20,000

2,60,000

5. Inventories  

 

Stock-in trade

1,40,000

 

Loose tools

12,000

1,52,000

6. Trade Receivables

 

Bills Receivables

1,20,000

7. Cash and Cash Equivalents

 

Cash at Bank

1,35,000

8. Other Current Assets

 

Preliminary Expenses                      2,40,000

 

Discount on Issue of Shares                20,000

2,60,000

 

2,60,000

Q:

Prepare the format of balance sheet and explain the various elements of balance sheet.

A:

PART I

Form of Balance Sheet.

Name of the Company……………………..

Balance Sheet as at …………………………

Particulars

Note No.
 

 

Figures as at the end of
current reporting period 

 

Figures as at the end of
previous reporting period

I.  EQUITY AND LIABILITIES

 

 

 

   (1) Shareholders’ Funds

 

 

 

    (a) Share Capital

 

 

 

    (b) Reserves and Surplus

 

 

 

    (c) Money received against  

         share warrants

 

 

 

   (2) Share Application   

      Money Pending Allotment

 

 

 

  (3)  Non-Current Liabilities

 

 

 

   (a) Long term borrowings

 

 

 

   (b) Deferred tax liabilities (Net)

 

 

 

   (c) Other long term liabilities

 

 

 

   (d) Long term provisions

 

 

 

  (4) Current Liabilities

 

 

 

    (a) Short term borrowings

 

 

 

    (b) Trade payables

 

 

 

    (c) Other current liabilities

 

 

 

    (d)Short term provisions

 

 

 

Total

 

 

 

II. ASSETS

 

 

 

  (1) Non Current Assets

 

 

 

   (a) Fixed Assets

 

 

 

          (i) Tangible Assets

 

 

 

         (ii) Intangible Assets

 

 

 

        (iii) Capital work in  

          progress

 

 

 

      (iv) Intangible assets under   

             development

 

 

 

(b) Non-current investments

 

 

 

(c) Deferred tax assets (net)

 

 

 

(d) Long term loans and  

      advances

 

 

 

(e) Other non-current assets

 

 

 

(2) Current Assets

 

 

 

(a) Current investments

 

 

 

(b) Inventories

 

 

 

(c) Trade receivables

 

 

 

(d) Cash and cash equivalents

 

 

 

(e) Short term loans and

      advances

 

 

 

(f) Other current assets

 

 

 

Total

 

 

 

 

Equity and Liabilities: It is divided into two parts – liability towards owners, i.e., equity, and liability towards outsiders.

Share Capital: It shows the details of the authorised capital, issued capital and paid-up capital in terms of the number and amount of each type of share, and also the amount of calls in arrears and the forfeited shares.

Reserves and Surplus includes Capital Reserves, Capital Redemption Reserve, Securities Premium Reserve, Debenture Redemption Reserve, Share Options Outstanding Account, Other Reserves (specify the nature and purpose of each reserve and the amount in respect thereof), Surplus, i.e., balance in the Statement of Profit and Loss after appropriations such as dividend, bonus shares etc.

Money received against share warrants: It is a part of the shareholders’ funds. These are instruments issued by a company that are converted into shares at a pre determined price, at a later date.

Non-current liabilities are those liabilities which are not due for payment within the next 12 months.

Current liabilities are those liabilities which are due for payment within the next 12 months.

Assets: These are broadly classified into two types, i.e., non-current assets and current assets.

Non-current Assets: These are assets which are not held with the purpose of selling or converting them into cash, but to improve the earning capacity of a business.

Current Assets: It includes current investments, inventories, trade receivables, cash and cash equivalents, short term loans and advances and other current assets.

Q:

Prepare the format of statement of profit and loss and explain its items up to the ascertainment of profit before tax.

A:

Form of Statement of Profit and Loss

Particulars

Note No.

Figures at the end of current reporting period

Figures at the end of previous reporting period

I. Revenue from operations

 

 

 

II. Other income

 

 

 

III. Total revenue

 

 

 

IV. Expenses

 

 

 

Cost of materials consumed

 

 

 

Purchases of stock-in-trade

 

 

 

Changes in inventories of

 

 

 

Finished goods

 

 

 

Work-in-progress

 

 

 

Stock-in-trade

 

 

 

Employees benefit expenses

 

 

 

Finance costs

 

 

 

Depreciation and amortisation expenses

 

 

 

Other expenses

 

 

 

Total expenses

 

 

 

V. Profit before tax

(III – IV)

 

 

 

Revenue from operations: It includes Net sales, sale of scrap and revenue from services.

Other income: It includes rent received, interest and dividend received and profit on sale of fixed assets or investment.

Cost of materials consumed: It is equal to opening inventory of materials plus net purchases minus closing inventory of materials.

Changes in inventories of finished goods, work-in-progress and stock-in-trade: It is equal to opening inventory minus closing inventory.

Employee benefit expenses: It includes the following:

  1. Wages
  2. Salaries
  3. Staff welfare expenses
  4. Contribution to Provident Fund and other staff welfare funds

Depreciation and amortisation expenses: Depreciation refers to amount of tangible assets written off. Amortisation refers to amount of intangible assets written off.

Finance costs: It includes the following:

  1. Amount of interest paid by the company on its borrowings.
  2. Other borrowing cost which includes discount on issue of debentures and premium payable on redemption of debentures etc.

Other expenses: It includes expenses other than the above six heads of expense. These could be telephone expenses, rent and taxes, selling and distribution expenses, loss on sale of fixed assets or investments, bad debts, cash discount allowed etc.

Benefits of NCERT Solutions

It is highly recommended to refer to NCERT Solutions while preparing for class 12 board exams. Here are some of the benefits of using NCERT Solutions by Extramarks.
1. It is written in such a manner to help the student enjoy the learning journey.

2. It aims to help students grasp the concepts of every chapter.
3. It comes with in-depth explanations to help student boost their confidence.

4. Diagrams are provided, wherever required in the solution.
5. It is free of cost.

Tips & Strategies for Class 12 Exam Preparation

1. Start with making a time table. Prioritize the important topics and study them well.

2. Class 12 is important for your career, therefore follow your time table religiously.

3. Always make brief notes while studying a chapter as they will come in handy for revision before the exam.

4. Understand your concepts, diagrams etc. with NCERT Solutions given on the Extramarks website and the Extramarks – The Learning App.

5. Most importantly, be confident.

Why Opt for Extramarks NCERT Solutions for Class 12 ?

Class 12 board exams are the pillars of a successful career in your life. Thus, with the right study materials, students will be able to achieve their desired marks in exams. NCERT Solutions for class 12 by Extramarks will greatly help students in understanding chapters and will be like a companion in their learning journey.

Frequently Asked Questions

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How to study for the Class 12 Maths CBSE exam? 

Math is a subject that analyses the critical and analytical thinking of a student and tests numerical questions. So, the best way to prepare for Math is by studying the NCERT solutions. Make a timetable, jot down the important formulas, and theorems, make time for revision and give as much time as you can give to practicing questions. Solve a maximum number of questions and time your efforts. Extramarks - The Learning App has several sample papers along with NCERT 12 solutions that can be used for practicing for class 12 Math exam.

How to Prepare for Class 12 Board Exams?

Class 12 exams seem like a major feat, but they are actually quite simple and really just a milestone that every student cross in his/her academic life. There is nothing to fear as you can easily prepare for the exams with the help of NCERT solutions for class 12 that are given on the Extramarks website or Extramarks – The Learning App

What part of the CBSE Class 12 exam syllabus is covered in the NCERT books?

The CBSE guide for class 12 study material NCERT contains all syllabus prescribed to students of class 12. Look for NCERT solutions on the Extramarks website in the footer section and you will find all solutions there. 

Do you provide solutions for All subjects for class 12 CBSE? 

Yes, Extramarks provides all NCERT class 12 solutions for all subjects for class 12. Extramarks - The Learning App also has solved and unsolved sample papers that you can use to practice for your exams. You can also find the previous year`s solved board question paper on the app.

What are some expert tips to score good marks in Class 12 CBSE?

To score good marks in class 12 CBSE board exams, you must follow these tips:

1. Make a timetable to study well. Organize and prioritize the topics you want to study and haven`t yet had the time to open. Start studying with the most crucial topics.

2. Follow your timetable religiously. Save time for relaxing activities like meditation, swimming or sleeping.

3. Make brief notes containing important answers, character sketches, theorems, formulae, etc. Make clear notes so you can study them before the exam.

4. Learn from class 12 NCERT solutions given on Extramarks website.

5. Be confident that you can crack these exams and take time off to relax.

6. Revise thoroughly before the exam.

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