Important Questions for Class 12 Accountancy

Among the most important subjects for commerce students is Class 12 Accountancy. It provides the foundation of real-life financial management, analysis, and reporting. No matter which route you choose to go, a good background in accountancy is mandatory.

To get a better score and enhance your ability to think, below is the full list of significant questions in each unit of Class 12 Accountancy and a topic outline and examples.

Key Overview of Class 12 Accountancy Syllabus 

Class 12 Accountancy may seem lengthy, but it’s one of the easiest subjects to score well in, provided you focus on concepts and practice. Go through each of these important questions and their answers, understand the logic behind entries and ratios, and practice them regularly. This approach will not only help you score high marks in your board exams but also give you a strong foundation for professional commerce courses.

Class 12 Accountancy is further classified into two:

Part A: Accounting of Not-for-Profit Organizations, Partnership Firms and Companies

• The Accounting of Not-for-profit Organizations.
• Partnership Firms Accounting.
• Accounting for Companies

Part B: Financial Statement Analysis.

• Financial Statement Analysis.
• Cash Flow Statement

Conceptual clarity and written practice are both necessary since (practical components and project work are very marked) your idea is marked too.

Unit 1: Accounting of Not-for-Profit Organizations (NPO).

It is a chapter that teaches the maintenance of accounts in charitable institutions and clubs as well as in schools.

Important Questions 

Q1. What is a Not-for-Profit Organization?

A Not-for-profit organization (NPO) is an institution established for promoting social, cultural, educational, or charitable objectives, not for earning profits. Examples include schools, hospitals, and sports clubs. Their main motive is to render service, and any surplus earned is used for furthering the organization’s goals. 

Q2. What is the difference between the Receipts and Payments Account and the Income and Expenditure Account?

 

Basis	Receipts and Payments Account	Income and Expenditure Account
Nature	Real Account	Nominal Account
Basis of Recording	Cash basis	Accrual basis
Period	Includes all cash transactions (past, current, or future)	Includes income and expenses relating only to the current year
Objective	To show total cash inflows and outflows	To show surplus or deficit of the period

 

Q3. What is the formula to calculate subscription income?

Subscription income is the amount received from members for maintaining their membership. 

Subscription for Current Year = Total Received + Outstanding at End - Outstanding at Beginning - Advance Received 

Q4. Elaborate on Capital Fund.

The Capital Fund (or General Fund) represents the accumulated surplus of an NPO. It appears on the liabilities side of the balance sheet. Any surplus or deficit during the year is added to or deducted from this fund.

Unit 2: Accounting for Partnership Firms

Q5. What is Goodwill?

Goodwill is the value of a firm’s reputation and customer loyalty that enables it to earn higher profits than other firms. It’s an intangible asset and arises during events like the admission or retirement of a partner.

Q6. How is Goodwill Valued using the Average Profit Method?

Under this method, goodwill is calculated as

Goodwill = Average Profit × Number of Years’ Purchase

Q7. What is Gaining Ratio, and How is it Calculated?

 The gaining ratio is the ratio in which continuing partners gain the share of the outgoing or deceased partner.

Q8. How is Revaluation Account prepared?

The Revaluation Account is prepared to record changes in the value of assets and liabilities during reconstitution of a firm.

• Increase in asset value → Credit side
• Decrease in asset value → Debit side
• Increase in liability → Debit side
• Decrease in liability → Credit side

Profit on revaluation is transferred to old partners in their old profit-sharing ratio.

Q9. What is the difference between Revaluation Account and Realisation Account?

 

Basis	Revaluation Account	Realisation Account
Purpose	For change in partnership (admission, retirement, etc.)	For dissolution of firm
Time of Preparation	During reconstitution	During dissolution
Result	Revaluation profit or loss	Profit or loss on realization

 

Unit 3: Accounting for Companies

Q10. What is the difference between Equity Shares and Preference Shares?

 

Basis	Equity Shares	Preference Shares
Dividend	Variable dividend	Fixed dividend
Voting Rights	Have voting rights	No voting rights (normally)
Repayment	Paid after preference shareholders	Paid before equity holders
Risk	Higher risk	Lower risk

 

Q11. What is Forfeiture and Reissue of Shares?

When a shareholder fails to pay call money, the company may forfeit the shares (cancel ownership).
Later, these shares can be reissued at par, premium, or discount (within SEBI guidelines).

Q12. What is Securities Premium Reserve?
It is created when shares are issued at a price higher than their face value.
Example: If a ₹10 share is issued at ₹12, the extra ₹2 goes to the Securities Premium Reserve, which can be used for issuing bonus shares or writing off preliminary expenses.

Q13. What is Financial Statement Analysis?

It means examining financial data from a company’s Balance Sheet and Profit & Loss Account to assess profitability, solvency, and liquidity.

Q14. What is Ratio Analysis?

 It involves calculating ratios to evaluate a firm’s financial health.
Common ratios include:

• Current Ratio = Current Assets / Current Liabilities
• Debt-Equity Ratio = Total Debt / Shareholders’ Equity
• Net Profit Ratio = (Net Profit / Net Sales) × 100

Q15. What are the limitations of financial analysis?

• Based on historical data
• Ignores non-financial factors (like employee morale)
• Window dressing may distort results
• Comparability may be difficult across industries
   

Unit 5: Cash Flow Statement

Q16. What is a Cash Flow Statement?

 A Cash Flow Statement shows inflows and outflows of cash during a period, categorized under:

• Operating Activities: Main business operations
• Investing Activities: Purchase/sale of assets, investments
• Financing Activities: Issue or redemption of shares, debentures, loans

Q17. How is Cash from Operations calculated? 

Cash from Operations = Net Profit + Non-Cash Expenses (like DEpreciation) - Increase in Current Assets + Increase in Current Liabilities 

FAQs on Important Questions in Class 12 Accountancy

Which are the most important chapters in Class 12 Accountancy?

Partnership Accounts, Company Accounts, and Cash Flow Statements carry the highest marks weightage in CBSE exams.

How can I improve accuracy in numerical questions?

Revise journal entries daily, double-check your calculations, and clearly show working notes in your answer sheets; they fetch you extra marks.

What’s the best way to prepare theory questions in Accountancy?

Make short notes of definitions, differences, and uses of terms like "goodwill," "capital fund," "reserves," and "ratios." Revise them before the exam.