# Financial Statements of a Company Notes | SwaVid Financial Statements of a Company, NCERT Class 12 Accountancy: notes with key ideas, formats, common mistakes and 3 quick checks with worked answers. Canonical: https://www.swavid.com/cbse/class-12/accountancy/chapter/financial-statements-of-a-company Source: https://www.swavid.com/cbse/class-12/accountancy/chapter/financial-statements-of-a-company # Financial Statements of a Company ## Definitions, formats and formulas ## Key ideas ## Common mistakes ## Quick checks ## Keep going ## Questions parents ask ## Class 12 Accountancy on SwaVid ### Meaning and components of financial statements ### General instructions and Schedule III ### Classification of assets and liabilities ### Structure of the balance sheet ### Structure of the statement of profit and loss ### Operating cycle ### Next chapter ### Related chapter ### Related chapter ### All chapters SwaVid › CBSE › Class 12 › Accountancy › Financial Statements of a Company Notes written by SwaVid from the NCERT textbook. Class 12 Accountancy, NCERT Accountancy Part II: companies, analysis and cash flow. Key ideas, definitions and common mistakes. CBSE does not print marks for a single chapter. Short answer. This chapter explains the meaning, nature, components, and presentation of company financial statements under Schedule III of the Companies Act, 2013. It trains students to prepare the balance sheet and the statement of profit and loss in the prescribed vertical format with notes to accounts. Source: NCERT Accountancy Part II: companies, analysis and cash flow (Reprint 2026-27) , Financial Statements of a Company Financial statements are the end products of accounting that provide a summary of the financial position and performance of a company. According to Section 2(40) of the Companies Act, 2013, a full set includes a balance sheet, a statement of profit and loss, a cash flow statement, a statement of changes in equity (if applicable), and explanatory notes. Every company registered under the Companies Act, 2013 must present its financial statements in the vertical format prescribed in Schedule III. Part I of Schedule III gives the format of the balance sheet, while Part II gives the format of the statement of profit and loss. Assets and liabilities are classified as current or non-current based on the operating cycle and a twelve-month duration. An item is current if it is expected to be realised or settled within the normal operating cycle or within twelve months from the reporting date. The balance sheet has two main divisions: Equity and Liabilities, and Assets. Equity and Liabilities contains Shareholders' Funds, Share Application Money Pending Allotment, Non-Current Liabilities, and Current Liabilities. Assets contains Non-Current Assets and Current Assets. The statement of profit and loss lists Revenue from Operations and Other Income to compute Total Revenue. Expenses are subtracted from Total Revenue to determine Profit before Tax, after which Tax Expense is deducted to find Profit for the period. The operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. When the normal operating cycle cannot be identified, its duration is assumed to be twelve months. Try each question first. Then tap it to see the answer. Cost of materials consumed = Opening inventory + Purchases - Closing inventory Cost of materials consumed = ₹ 1,50,000 + ₹ 8,20,000 - ₹ 1,90,000 = ₹ 7,80,000 ₹ 7,80,000 Total revenue = Revenue from operations + Other income = ₹ 12,00,000 + ₹ 50,000 = ₹ 12,50,000 Profit before tax = Total revenue - Expenses = ₹ 12,50,000 - ₹ 8,50,000 = ₹ 4,00,000 Tax expense = 30% of ₹ 4,00,000 = ₹ 1,20,000 Profit for the period = ₹ 4,00,000 - ₹ 1,20,000 = ₹ 2,80,000 ₹ 2,80,000 Operating cycle is 18 months, and settlement is expected within 15 months. Since expected settlement falls within the operating cycle, the liability meets the condition of a current liability. Current liability Analysis of Financial Statements . Accounting Ratios . Cash Flow Statement . The 10 chapters of Class 12 Accountancy . CBSE does not give marks to one chapter. It prints marks for units or parts, and the chapter list page shows them all. No. They are written by SwaVid from the NCERT textbook. The CBSE curriculum is the reference for what is assessed. Analysis of Financial Statements. SwaVid is an AI tutor for Indian students in Classes 6 to 12. It finds the earlier ideas a child missed, then teaches today’s chapter. Start free to see how it works. - NCERT NCERT book, Class 12 - 80 marks, theory paper - 3 quick checks - Using the horizontal T-shape format for a company balance sheet . Always use the vertical format prescribed in Schedule III, Part I of the Companies Act, 2013, with figures for both the current and previous reporting periods. - Placing proposed dividend directly inside the balance sheet under liabilities . Proposed dividend is a contingent liability declared after the balance sheet date. Record it only as a footnote in the notes to accounts, not as a provision on the face of the balance sheet. - Showing calls-in-arrears as an asset under other current assets . Deduct calls-in-arrears from the subscribed but not fully paid-up capital under the sub-head Share Capital in the notes to accounts. - Classifying loose tools and stores under plant and machinery . Classify loose tools and stores and spares under Current Assets as part of Inventories in the notes to accounts. ## Key Links - [CBSE](https://www.swavid.com/cbse) - [Class 12](https://www.swavid.com/cbse/class-12) - [Accountancy](https://www.swavid.com/cbse/class-12/accountancy/chapters) - [Start free →](https://www.swavid.com/signup) - [All 10 chapters](https://www.swavid.com/cbse/class-12/accountancy/chapters) - [NCERT Accountancy Part II: companies, analysis and cash flow (Reprint 2026-27)](https://ncert.nic.in/textbook.php?leac2=0-6) - [Open notes](https://www.swavid.com/cbse/class-12/accountancy/chapter/analysis-of-financial-statements) - [Open notes](https://www.swavid.com/cbse/class-12/accountancy/chapter/accounting-ratios) - [Open notes](https://www.swavid.com/cbse/class-12/accountancy/chapter/cash-flow-statement) - [Class 12 Accountancy](https://www.swavid.com/cbse/class-12/accountancy/chapters) - [Start free →](https://www.swavid.com/signup)