Financial Statements of Companies
CBSE Class 12 Accountancy | 2026–27
1. Purpose
Company financial statements present financial position and performance using the prescribed format. Students should learn classification, major headings and notes rather than memorising an isolated balance-sheet picture.
2. Balance Sheet – Major Structure
| Equity & Liabilities | Assets |
|---|---|
| Shareholders’ Funds | Non-current Assets |
| Non-current Liabilities | Current Assets |
| Current Liabilities |
3. Statement of Profit and Loss
Revenue and expenses are classified to arrive at profit/loss for the period. Students must follow the prescribed presentation and apply adjustments carefully.
4. Notes to Accounts
Notes give supporting details for major statement heads. For example, share capital requires disclosure of authorised, issued, subscribed and paid-up components as applicable.
5. Adjustment Logic
When an adjustment affects two places, record both effects. For example, an outstanding expense affects the expense figure and the liability/current-liability side. A prepaid expense reduces the expense and creates a current asset.
6. Worked Classification
Plant and machinery is normally presented under non-current assets; trade receivables under current assets subject to the applicable classification; trade payables under current liabilities. Classification should follow the prescribed presentation and facts given.
🖼️ Preparation Flow
Exam Practice
- Prepare a Balance Sheet with notes from given data.
- Prepare Statement of Profit and Loss after adjustments.
- Classify 20 given items under correct major heads.
- Explain the two effects of common adjustments.
MCQs
- Balance Sheet presents financial position at a particular date. True.
- Statement of Profit and Loss relates to a period. True.
- Notes provide supporting details. True.
- Every adjustment should be applied exactly once in each relevant place. True.
- Trade payables are generally a current-liability item subject to classification rules. True.