CBSE Class 12 Accountancy Previous Year Question Paper 2014 - Introduction To Financial Statement Analysis
This CBSE Class 12 Accountancy Previous Year Question Paper from 2014 focuses on the 'Introduction To Financial Statement Analysis' chapter. It includes 1-mark and 3-mark questions, testing students' understanding of the objectives, advantages, limitations, and significance of financial statement analysis for various stakeholders like top management, lenders, and tax authorities. Questions also delve into concepts like 'window dressing' and assessing solvency. Solving this board question paper helps students grasp the exam pattern, identify key topics, and prepare effectively for their board examinations by practicing with authentic past questions.
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Quick info
| Board | CBSE |
|---|---|
| Class | 12 |
| Subject | Accountancy-II - PYP Chapter-Wise |
| Session | 2014 |
| Language | English |
| Type | Previous Year Question Paper |
| Exam type | Board Exam |
Paper pattern
The paper includes 1-mark and 3-mark questions related to the introduction of financial statement analysis.
Topics covered
Paper topics
- Financial Statement Analysis
- Limitations of Financial Statement Analysis
- Objectives of Financial Statement Analysis
- Significance of Financial Statement Analysis
- Qualitative Aspects
- Window Dressing
- Solvency Assessment
Important topics
- Limitations of Financial Statement Analysis
- Objectives of Financial Statement Analysis
- Significance for Top Management
- Significance for Lenders
- Window Dressing
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Question paper text
Introduction to Financial Statement Analysis
1 Mark Questions
- State any one limitation of financial statement analysis. (Delhi 2014, 2013, 2010; All India 2014,2014(C), 2013,2010)
Ans. Qualitative aspect is ignored Qualitative aspects like quality of management, quality of labour force, public relations are ignored while carrying out the analysis of financial statements, as financial statements are confined to monetary matters only.
2. State any one objective of financial statement analysis. (All India 2013; Delhi 2013,2010)
Ans. Inter-firm comparison With the help of financial statement analysis inter-firm comparison become easy. It helps in assessing own performance as well as that of others.
3. State one advantage of financial statements analysis. (Delhi, 2013)
Ans. Financial statement analysis helps the management to judge the overall as well as segmentwise operational efficiency of the business.
- Explain how financial statements analysis ignores qualitative elements. (All India 2013) Or
State how qualitative aspects are ignored in financial statements analysis. (Delhi 2011C)
Ans. Financial statements analysis ignore qualitative elements as it is confined to the monetary matters only because quality cannot be measured in monetary terms.
5. State the significance of analysis of financial statements to 'top
management'.(All India 2012)
Ans. Financial statement analysis enables the 'top management' to evaluate the overall efficiency of the business. It provides adequate information for planning, budgeting and controlling the affairs of the business.
6. State the significance of analysis of financial statements to 'lenders'? (Delhi 2012)
Ans. Lenders can judge long-term and short-term solvency of the business or its ability to repay debts and interest through analysis of financial statements.
7. How is the financial statements analysis useful to finance manager? (All India 2011)
Ans. Financial statements analysis is useful to finance manager for taking financial decisions for the business. It provides adequate information for financial planning.
- State the interest of tax authorities in the analysis of financial statements. (All India 2011; HOTS)
Ans. Tax authorities are interested to analyse the financial statements to know about the revenue of business firm and for the collection of various types of taxes.
9. How is 'window dressing' a limitation of financial statements analysis? (All India 2010)
Ans. 'Window dressing' refers to displaying the rosy picture of an enterprise through financial statements. Sometimes material information is concealed in financial statements due to 'window dressing'.
- How the solvency of a business is assessed by financial statements analysis?(Delhi 2010)
Ans. The solvency of a business is assessed by financial statements analysis through long-term and short-term solvency ratios.
3 Marks Questions
- Explain advantages or objectives of financial statements analysis. (Delhi 2010; All India 2010)
Ans. Advantages of financial statements analysis are as follows:
- Financial statements analysis helps the management to judge the overall as well as segment wise operational efficiency of the business.
- Financial statements analysis measures the short-term and long-term financial position of the business.
- Financial statements analysis assesses the growth potential of the business.
- What is meant by analysis of financial statements? State any two limitations of
analysis of it. (Delhi 2010 C, 2009 C, All India 2009) or Explain any three limitations of analysis of financial statements.(Delhi 2010 C, 2009 C; All India 2009)
Ans. Analysis of financial statements is the systematic numerical representation of the relationship of one financial fact with the other to measure the profitability, operational efficiency, solvency and the growth potential of the business. Various items of statement of profit and loss and balance sheet are compared and their inter-relationship is established. Limitations of analysis of financial statements are as follows:
- Financial statement analysis ignores qualitative aspects like quality of management, labour force and public relations.
- Suffering from the limitations of financial statements.
- Financial statements are historical in nature.
Frequently asked questions
What is this document?
This is a CBSE Class 12 Accountancy Previous Year Question Paper from 2014, specifically covering the topic 'Introduction To Financial Statement Analysis'.
What is the main purpose of solving this previous year paper?
Solving this previous year question paper helps students understand the exam pattern, question types, and important topics for the CBSE Class 12 Accountancy board exam.
What topics are covered in this paper?
This paper covers the introduction to financial statement analysis, including its objectives, advantages, limitations, and significance for various stakeholders.
What types of questions are included?
The paper includes 1-mark and 3-mark questions, testing conceptual understanding and application of knowledge.
How can this paper help improve scores?
By practicing with this authentic board question paper, students can identify areas for improvement, refine their answer-writing skills, and gain confidence, ultimately helping to improve their scores.
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