CBSE Class 12 Accountancy Accounting Ratios MCQs Set A

Question: Accounting ratios are an important tool of

a) Financial statement analysis

b) Trial Balance

c) Financial statement analysis and Trial Balance

d) None of the options

Answer: Financial statement analysis

Question: When the concept of ratio is defined in respected to the items shown in the financial statements, it is termed as

a) Accounting ratio

b) Financial ratio

c) Costing ratio

d) None of the options

Answer: Accounting ratio

Question: Which ratio is considered as safe margin of solvency?

a) Current ratio

b) Liquid ratio

c) Current ratio

d) None of the options

Answer: Current ratio

Question: Current ratio is stated as a crude ratio because

a) It measures only the quantity of current assets

b) It measures only the quality of current assets

c) It measures only the quantity of current assets and It measures only the quality of current assets

d) None of the options

Answer: It measures only the quantity of current assets

Question: Liquid ratio is also known as

a) Quick ratio and Acid test ratio

b) Quick ratio

c) Acid test ratio

d) None of the options

Answer: Quick ratio and Acid test ratio

Question: Debt-equity ratio is a sub-part of

a) Long-term solvency ratio

b) Debtors turnover ratio

c) Short-term solvency ratio

d) None of the options

Answer: Long-term solvency ratio

Question: Liquid assets is determined by

a) Current assets-stock-Prepaid expenses

b) Current assets +stock+ prepaid expenses

c) Current assets +Prepaid expenses

d) None of the options

Answer: Current assets-stock-Prepaid expenses

Question: Higher the ratio, the more favourable it is, doesn t stands true for

a) Operating ratio

b) Liquidity ratio

c) Net profit ratio

d) Stock turnover ratio

Answer: Operating ratio

Question: The most precise test of liquidity is

a) Absolute Liquid ratio

b) Quick ratio

c) Current ratio

d) None of the options

Answer: Absolute Liquid ratio

Question: Collection of debtors

a) Decreases current ratio

b) Increases current ratio

c) Has no effect on current ratio

d) None of the options

Answer: Decreases current ratio 

Question: In ABC analysis A class consist of items having

a) Accurate records

b) Good records

c) Minimal records

d) No records

Answer: Accurate records

Question: In the Balance sheet of a firm, the debt equity ratio is 2:1.The amount of long term sources is Rs.12 lac. What is the amount of tangible net worth of the firm?

a) Rs.8 lakh

b) Rs.6 lakh

c) Rs.4 lakh

d) None of the options

Answer: Rs.8 lakh

Question: Accounting Ratios are mathematical expression of the relationship between

a) Two Accounting Figures

b) Two Shareholders

c) Two Debtors

d) None of the options

Answer: Two Accounting Figures

Question: Ratio Analysis is a tool to measure the

a) Financial Status

b) Profit status

c) Loss Status

d) None of the options

Answer: Financial Status

Question: When ratios are calculated on the basis of accounting information, they are called

a) Accounting ratios

b) Working Capital Ratio

c) Profit ratio

d) None of the options

Answer: Accounting ratios

Question: Objectives of Ratio Analysis

a) All of the options

b) To know the areas of an enterprise which need more attention

c) To know about the potential areas which can be improved on

d) Helpful in comparative analysis of the performance

Answer: All of the options

Question: Ratio Analysis helpful in

a) Comparative analysis of the performance and Budgeting and forecasting

b) Comparative analysis of the performance

c) Budgeting and forecasting

d) None of the options

Answer: Comparative analysis of the performance and Budgeting and forecasting

Question: Ratio Analysis provide analysis of the

a) Liquidity

b) Solvency

c) Profitability

d) None of the options

Answer: Liquidity

Question: Ratio Analysis provide information useful for

a) Preparing the plans for future

b) Share holders

c) Debentures holder

d) None of the options

Answer: Preparing the plans for future

Question: Advantages of Ratio Analysis

a) All of the options

b) It is useful in analysis of key financial figures

c) It is useful in analysis of financial statements

d) Better understand financial numbers

Answer: All of the options

Question: Current ratio is stated as a crude ratio because

a) It measures only the quantity of current assets

b) It measures only the quality of current assets

c) It measures only the quantity of current assets and It measures only the quality of current assets

d) None of the options

Answer: It measures only the quantity of current assets

Question: Limitations of Ratio Analysis

a) All of the options

b) Accounting ratios ignore qualitative factors

c) Absence of universally accepted terminology

d) Ratios are affected by window-dressing

Answer: All of the options

Question: Ratio Analysis Price level changes

a) Ignored

b) Noticed

c) Ignored and Noticed

d) None of the options

Answer: Ignored

Question: Ratio Analysis ignored

a) Qualitative factors

b) Quantity Factors

c) Qualitative factors and Quantity Factors

d) None of the options

Answer: Qualitative factors

Question: Ratio Analysis affected by

a) All of the options

b) Window-dressing

c) Personal bias

d) Ability of the analyst

Answer: All of the options

Question: An accounting ratio is a

a) Mathematical expression

b) Logical expression

c) Mathematical expression and Logical expression

d) None of the options

Answer: Mathematical expression

Question: Accounting ratios classified as under

a) All of the options

b) Liquidity Ratios

c) Current ratio

d) Solvency Ratios

Answer: All of the options

Question: Current ratio is also known as

a) Working capital ratio

b) Profit Sharing Ratio

c) Working capital ratio and Profit Sharing Ratio

d) None of the options

Answer: Working capital ratio

Question: Which Ratio establishes relationship between current assets and current liabilities

a) Current ratio

b) Liquidity Ratios

c) Solvency Ratios

d) None of the options

Answer: Current ratio

Question: Current Ratio is

a) Current Assets/Current Liabilities

b) Current Assets-Current Liabilities

c) Current Assets x Current Liabilities

d) None of the options

Answer: Current Assets/Current Liabilities

Question: Which Items Included in Current Assets for get the current ratio

a) All of the options

b) Current investments

c) Current Stock

d) Trade receivables (bills receivable and sundry debtors less provision for doubtful debts)

Answer: All of the options

Question: Which Items Included in Current Assets for get the current ratio

a) All of the options

b) Short-term borrowings

c) Cash balance

d) Short-term provisions

Answer: All of the options

Question: Liquid ratio is also known as

a) Quick Ratio and Test Ratio

b) Quick Ratio

c) Test Ratio

d) None of the options

Answer: Quick Ratio and Test Ratio

Question: Liquid Ratio is

a) Liquid Assets or Quick Assets/Current Liabilities

b) Liquid Assets or Quick Assets+Current Liabilities

c) Liquid Assets or Quick Assets-Current Liabilities

d) None of the options

Answer: Liquid Assets or Quick Assets/Current Liabilities

Question: Items Included in Liquid/Quick Assets

a) All of the options

b) Items Included in Liquid/Quick Assets

c) Trade receivables

d) Cash and cash equivalents

Answer: All of the options

Question: Items excluded in liquid assets are

a) Inventories and prepaid expenses

b) Inventories

c) Prepaid expenses

d) None of the options

Answer: inventories and prepaid expenses

Question: Which ratios judge the long-term financial position of an enterprise

a) Solvency Ratios

b) Quick Ratio

c) Test Ratio

d) None of the options

Answer: Solvency Ratios

Question: Establishes the relationship between long-term debt (external equities) and the equity (internal equities)

a) Debt to Equity ratio

b) Quick Ratio

c) Test Ratio

d) None of the options

Answer: Debt to Equity ratio

Question: Debt to Equity ratio establishes the relationship between

a) long-term debt (external equities) and the equity (internal equities)

b) long-term debt (external equities) and the current Assets(internal equities)

c) long-term debt (external equities) and the equity (internal equities) and long-term debt (external equities) and the current Assets(internal equities)

d) None of the options

Answer: long-term debt (external equities) and the equity (internal equities)

Question: Debt to Equity Ratio is

a) Debt (Long-term external equities)+Equity (Shareholders funds)

b) Debt (Long-term external equities)-Equity (Shareholders funds)

c) Debt (Long-term external equities)+Equity (Shareholders funds) and Debt (Long-term external equities)-Equity (Shareholders funds)

d) None of the options

Answer: Debt (Long-term external equities)+Equity (Shareholders funds)

Question: Cash Balance Rs.5,000; Trade Payables Rs.40,000; Inventory Rs.50,000; Trade Receivables Rs.65,000 and Prepaid Expenses are Rs. 10,000. Liquid Ratio will be

a) 1.75 : 1

b) 2 : 1

c) 3.25 : 1

d) 3 : 1

Answer: A

Question: Current Assets Rs.4,00,000; Current Liabilities Rs.2,00,000 and Inventory is Rs.50,000. Liquid Ratio will be :

a) 2 : 1

b) 2.25 : 1

c) 4 : 7

d) 1.75 : 1

Answer: D

Question: Which of the following transactions will improve the Current Ratio :

a) Cash Collected from Trade Receivables

b) Purchase of goods for cash

c) Payment to Trade Payables

d) Credit purchase of Goods

Answer: C

Question: Current Assets Rs.85,000; Inventory Rs.22,000; Prepaid Expenses Rs.3,000. Then liquid assets will be :

a) Rs.63,000

b) 60,000

c) X 82,000

d) X 1,10,000

Answer: B

Question: A Company’s Quick Ratio is 1.5 : 1; Current Liabilities are Rs.2,00,000 and Inventory is X 1,80,000. Current Ratio will be :

a) 0.9:1

b) 1.9:1

c) 1.4:1

d) 2.4:1

Answer: D

Question: A Company’s Quick Ratio is 1.8 : 1; Liquid Assets are Rs.5,40,000 and Inventory is Rs. 1,50,000. Its Current Ratio will be :

a) 2 : 1

b) 2.3 : 1

c) 1.8:1

d) 1.3:1

Answer: B

Question: What will be the amount of Gross Profit, if revenue from operations are Rs.6,00,000 and Gross Profit Ratio 20% of revenue from operations?

a) Rs. 1,50,000

b) Rs. 1,00,000

c) Rs. 1,20,000

d) Rs. 5,00,000

Answer: C

Question: Revenue from operations is Rs. 1,80,000; Rate of Gross Profit is 25% on cost. What will be the Gross Profit?

a) Rs.45,000

b) Rs.36,000

c) Rs.40,000

d) Rs.60,000

Answer: B

Question: Operating ratio is :

a) Cost of revenue from operations + Selling Expenses/Net revenue from operations

b) Cost of production + Operating Expenses/Net revenue from operations

c) Cost of revenue from operations + Operating Expenses/Net Revenue from Operations

d) Cost of Production/Net revenue from operations.

Answer: C

Question: Two basic measures of liquidity are :

a) Inventory turnover and Current ratio

b) Current ratio and Quick ratio

c) Gross Profit ratio and Operating ratio

d) Current ratio and Average Collection period

Answer: B

Question: Current Ratio is :

a) Solvency Ratio

b) Liquidity Ratio

c) Activity Ratio

d) Profitability Ratio

Answer: B

Question: Current Ratio is :

a) Liquid Assets/Current Assets

b) Fixed Assets/Current Assets

c) Current Assets/Current Liabilities

d) Liquid Assets/Current Liabilities

Answer: C

Question: Debt Equity Ratio is :

a) Liquidity Ratio

b) Solvency Ratio

c) Activity Ratio

d) Operating Ratio

Answer: B

Question: Debt Equity Ratio is :

a) Long Term Debts/Shareholder’s Funds

b) Short Term Debts/Equity Capital

c) Total Assets/Long term Debts

d) Shareholder’s Funds/Total Assets

Answer: A

Question: Proprietary Ratio is :

a) Long term Debts/Shareholder’s Funds

b) Total Assets/Shareholder’s Funds

c) Shareholder’s Funds/Total Assets

d) Shareholder’s Funds/Fixed Assets

Answer: C

Question: lf Current Ratio ofa firm is 2.5 :1 and its Current Liabilities are ,00,000. Its Working Capital will be

a) 3,00,000.

b) 3,75,000.

c) 11,00,000.

d) 7,00,000.

Answer: A

Question: Non-current Assets of a firm are 26,00,000, Current Assets are 9,00,000 and Shareholders’ Funds are 21,50, 000.TotaI debts of the firm will be

a) 43,50,000.

b) 13,50,000.

c) 21,50,000.

d) 38,50,000.

Answer: B

Question: Sincere Ltd. has a Proprietary Ratio of 25%. To maintain this ratio at 30%, management may ~

a) increase Equity.

b) Reduce Debt.

c) Either Increase Equity or Reduce Debt.

d) lncrease Current Assets.

Answer: C

Question: From the following, which ratio is not a part of Profitability Ratio:

a) Proprietary Ratio

b) Gross Profit Ratio

c) Operating Ratio

d) Net Profit Ratio

Answer: A

Question: From the following information, calculate Proprietary Ratio: Share Capital 5,00,000, Non- current Assets 22,00,000, Reserves and Surplus 3,00,000, Current Assets 10,00,000.

a) 100%

b) 70%

c) 40%

d) 25%

Answer: D

Question: The two basic measures of operational efficiency of a company are

a) Inventory Turnover Ratio and Working Capital Turnover Ratio

b) Liquid Ratio and Operating Ratio.

c) Liquid Ratio and Current Ratio.

d) Gross Profit Margin and Net Profit Margin.

Answer: A

Question: A Company’s Current Ratio is 3 : 1 and Liquid Ratio is 1.2 : 1. If its Current Liabilities are Rs.2,00,000, what will be the value of Inventory?

a) Rs.2,40,000

b) Rs.3,60,000

c) Rs.4,00,000

d) Rs.40,000

Answer: B

Question: A Company’s Current Ratio is 2.5 : 1 and Liquid Ratio is 1.6 : 1. If its Current Assets are Rs.7,50,000, what will be the value of Inventory?

a) Rs.4,50,000

b) Rs.4,80,000

c) Rs.2,70,000

d) Rs. 1,80,000

Answer: C

Question: Current Ratio of a Company is 2.5 : 1. If its working capital is Rs. 60,000, its current liabilities will be :

a) Rs.40,000

b) Rs.60,000

c) Rs. 1,00,000

d) Rs.24,000

Answer: A

Question: Quick Assets do not include

a) Cash in hand

b) Prepaid Expenses

c) Marketable Securities

d) Trade Receivables

Answer: B

Question: Current Assets do not include :

a) Prepaid Expenses

b) Inventory

c) Goodwill

d) Bills Receivable

Answer: C

Question: Quick Ratio is also known as :

a) Liquid Ratio

b) Current Ratio

c) Working Capital Ratio

d) None of the Above

Answer: A

Question: Items Included in Long-term Debts

a) Long-term borrowings and Long-term provisions

b) Long-term borrowings

c) Long-term provisions

d) None of the options

Answer: Long-term borrowings and Long-term provisions

Question: Equity or Shareholders Funds is equal to

a) Equity Share Capital + Preference Share Capital+ Reserves and Surplus

b) Equity Share Capital + Preference Share Capital

c) Equity Share Capital + Reserves and Surplus

d) None of the options

Answer: Equity Share Capital + Preference Share Capital+ Reserves and Surplus

Question: Working Capital is equal to

a) Current Assets Current Liabilities

b) Current Assets + Current Liabilities

c) Current Assets/Current Liabilities

d) None of the options

Answer: Current Assets Current Liabilities

Question: Which ratio establishes the relationship between proprietors funds and total assets.

a) Proprietary ratio

b) Solvency Ratios

c) Quick Ratio

d) Test Ratio

Answer: Proprietary ratio

Question: Proprietary ratio Proprietary ratio

a) Proprietors funds and total assets

b) Proprietors funds and total Liabilities

c) Proprietors funds and total assets and Proprietors funds and total Liabilities

d) None of the options

Answer: Proprietors funds and total assets

Question: Proprietary Ratio is equal to

a) Proprietors Funds or Shareholders Funds/Total Assets

b) Proprietors Funds or Shareholders Funds + Total Assets

c) Proprietors Funds or Shareholders Funds - Total Assets

d) None of the options

Answer: Proprietors Funds or Shareholders Funds/Total Assets

Question: Proprietors Funds or Shareholders Funds is equal to

a) Liabilities Approach Share Capital + Reserves and Surplus

b) Liabilities Approach Share Capital - Reserves and Surplus

c) Liabilities Approach Share Capital / Reserves and Surplus

d) None of the options

Answer: Liabilities Approach Share Capital + Reserves and Surplus

Question: Non-current Assets is equal to

a) Tangible assets + Intangible assets + Non-current trade

b) Tangible assets - Intangible assets - Non-current trade

c) Tangible assets + Intangible assets + Non-current trade and Tangible assets - Intangible assets - Non-current trade

d) None of the options

Answer: Tangible assets + Intangible assets + Non-current trade

Question: The quick ratio of a company is 2 : 1. State giving reasons, (for any four) which of the following would improve, reduce or not change the ratio

a) Purchase of machinery for cash

b) Purchase of goods on credit (iii) Sale of furniture at cost

c) Sale of goods at a profit

d) None of the options

Answer: Purchase of machinery for cash

Question: The debt equity ratio of a company is 1:1 state giving reasons, (any four) which of the following would improve, reduce or not change the ratio

a) Purchase, of machinery for cash

b) Sale of goods at a profit

c) Redemption of debentures at a premium

d) None of the options

Answer: Purchase, of machinery for cash

Question: Analyses of data provided in the financial statements a is termed as

a) Financial analysis

b) Profit analysis

c) Loss Analysis

d) None of the options

Answer: Financial analysis

Question: Long term creditors are concerned about the ability of a firm to discharge its obligations to pay

a) Interest and repay the principal amount of term

b) Interest

c) Repay the principal amount

d) None of the options

Answer: Interest and repay the principal amount of term

Question: Ratios help in comparisons of a firm s results over a number of

a) Accounting periods as well as with other business enterprises

b) Share as well as with other business enterprises

c) Debentures as well as with other business enterprises

d) None of the options

Answer: Accounting periods as well as with other business enterprises

Question: The following groups of ratios primarily measure risk

a) Liquidity, activity and debt

b) liquidity, activity and profitability

c) liquidity, activity and common stock

d) activity, debt and profitability

Answer: Liquidity, activity and debt

Question: The ___________ ratios are primarily measures of return.

a) Activity

b) Liquidity

c) Profitability

d) Debt

Answer: Activity

Question: The _____ of a business firm is measured by its ability to satisfy

a) Liquidity

b) Activity

c) Liquidity

d) Debt

Answer: Liquidity

Question: _______ratios are a measure of the speed with which various accounts are converted into sales or cash.

a) Activity

b) Liquidity

c) Activity

d) Debt

Answer: Activity

Question: The two basic measure of liquidity are

a) Current ratio and liquid ratio

b) Inventory turnover and current ratio

c) Gross profit margin and operating ratio

d) Current ratio and average collection period

Answer: Current ratio and liquid ratio

Question: The______is a measure of liquidity which excludes_______, generally the least liquid asset.

a) Liquid ratio, inventory

b) Current ratio, accounts debtors

c) Current ratio, inventory

d) None of the options

Answer: Liquid ratio, inventory

Question: The_______is useful in evaluating credit and collection policies.

a) Average collection period

b) Average payment period

c) Current asset turnover

d) None of the options

Answer: Average collection period

Question: The_____measures the activity of a firms inventory

a) Inventory turnover

b) Average collection period

c) Current ratio

d) None of the options

Answer: Inventory turnover

Question: The_____ratio may indicate the firm is experiencing stock outs and lost sales.

a) Quick

b) Inventory turnover

c) Average collection period

d) None of the options

Answer: Quick

Question: ABC Co extends credit terms of 45 days to its customer, its credit collection would be considered poor if its average collection period was

a) 47 days

b) 57 days

c) 36 days

d) 30 days

Answer: 47 days

Question: ______are especially interested in the average payment period, since it provides them with a sense of the bill-paying patterns of the firm.

a) Lenders and suppliers

b) Customers

c) Stockholders

d) Borrowers and buyers

Answer: Lenders and suppliers

Question: The ____ ratios provide the information critical to the long-run operation of the firm

a) Solvency

b) Profitability

c) Activity

d) Liquidity

Answer: Solvency

Question: Accounting ratios are classified in which categories

a) Traditional Classification and Functional Classification

b) Traditional Classification

c) Functional Classification

d) None of the options

Answer: Traditional Classification and Functional Classification

Question: Which ratios are those accounting ratios which are based on the Financial Statement like Trading and Profit and Loss Account and Balance Sheet

a) Traditional ratios

b) Functional ratios

c) Traditional ratios and Functional ratios

d) None of the options

Answer: Traditional ratios

Question: Traditional ratios are those accounting ratios which are based on the

a) Financial Statement

b) Trial Balance

c) Financial Statement and Trial Balance

d) None of the options

Answer: Financial Statement

Question: Traditional Classification is further divided into the categories

a) All of the options

b) Income Statement Ratios

c) Balance Sheet Ratios

d) Composite Ratios

Answer: All of the options

Question: Income Statement Ratios

a) Gross Profit Ratio

b) Trial Balance Ratio

c) Gross Profit Ratio and Trial Balance Ratio

d) None of the options

Answer: Gross Profit Ratio

Question: Balance Sheet Ratios are

a) All of the options

b) Current Ratio,

c) Debt Equity Ratio

d) None of the options

Answer: All of the options

Question: Composite Ratio is

a) Debtors Turnover Ratio

b) Solvency

c) Profitability

d) Activity

Answer: Debtors Turnover Ratio

Question: The functional ratios are further divided into the which categories

a) All of the options

b) Liquidity Ratio

c) Solvency Ratio

d) Activity Ratio

Answer: All of the options

Question: Liquidity ratios are calculated to determine

a) Short term solvency

b) Long term solvency

c) Short term solvency and Long term solvency

d) None of the options

Answer: Short term solvency

Question: Solvency ratios are calculated to determine

a) Long term solvency

b) Short term solvency

c) Long term solvency and Short term solvency

d) None of the options

Answer: Long term solvency

Question: Activity Ratios is relate to

a) Sales or cost of goods sold

b) Profit

c) Loss

d) None of the options

Answer: Sales or cost of goods sold

Question: Debtor turnover ratio is also knows as

a) Accounts receivable turnover ratio

b) Liquidity Ratio

c) Solvency Ratio

d) Activity Ratio

Answer: Accounts receivable turnover ratio

Question: Debtor turnover ratio indicates the velocity of

a) Debt collection of a firm

b) Debt Payment of firm

c) Debt collection of a firm and Debt Payment of firm

d) None of the options

Answer: Debt collection of a firm

Question: Debtors turnover ratio is equal to

a) Net credit sales/Average trade debtors

b) Net credit sales + Average trade debtors

c) Net credit sales - Average trade debtors

d) None of the options

Answer: Net credit sales/Average trade debtors

Question: Inventory ratio is equal to

a) Cost of good sold/Average inventory of cost

b) Cost of good sold x Average inventory of cost

c) Cost of good sold + Average inventory of cost

d) None of the options

Answer: Cost of good sold/Average inventory of cost

Question: A company’s Current assets are Rs. 3,00,000 and its current liabilities are Rs.2,00,000. Subsequently, it paid Rs.50,000 to its trade payables. Current ratio will be ................

a) 2 : 1

b) 1.67:1

c) 1.25:1

d) 1.5:1

Answer: B

Question: Current Assets of a Company were Rs. 1,00,000 and its current ratio was 2:1. After this the company paid Rs.25,000 to a Trade Payable. The Current Ratio after the payment will be :

a) 5 : 1

b) 2 : 1

c) 3 : 1

d) 4 : 1

Answer: C

Question: Current liabilities of a company were Rs.2,00,000 and its current ratio was 2.5 : 1. After this the company paid Rs. 1,00,000 to a trade payable. The current ratio after the payment will be :

a) 2 : 1

b) 4 : 1

c) 5 : 1

d) None of the above

Answer: A

Question: Fixed Assets Rs.5,00,000; Current Assets Rs.3,00,000; Equity Share Capital Rs.4,00,000; Reserve Rs.2,00,000; Long-term Debts Rs.40,000. Proprietary Ratio will be :

a) 75%

b) 80%

c) 125%

d) 133%

Answer: A

Question: The _______ ratios provide the information critical to the long run operation of the firm.

a) Liquidity

b) Activity

c) Solvency

d) Profitability

Answer: C

Question: If Debt equity ratio exceeds _______ , it indicates risky financial position.

a) 1 : 1

b) 2 : 1

c) 1 : 2

d) 3 : 1

Answer: B

Question: Opening Inventory 11,00,000; Closing Inventory Rs. 1,50,000; Purchases Rs.6,00,000; Carriage Rs.25,000; Wages Rs.2,00,000. Inventory Turnover Ratio will be :

a) 6.6 Times

b) 7.4 Times

c) 7 Times

d) 6.2 Times

Answer: D

Question: Revenue from Operations Rs.8,00,000; Gross Profit Ratio 25%; Opening Inventory Rs. 1,00,000; Closing Inventory Rs.60,000. Inventory Turnover Ratio will be :

a) 10 Times

b) 7.5 Times

c) 8 Times

d) 12.5 Times

Answer: B

Question: On the basis of following data, the cost of revenue from operations by a company will be :

Opening Inventory Rs.70,000; Closing Inventory Rs.80,000; Inventory Turnover Ratio 6 Times.

a) Rs.1,50,000

b) Rs.90,000

c) Rs.4,50,000

d) Rs.4,80,000

Answer: C

Question: Total revenue from operations Rs.27,00,000; Credit revenue from operations Rs. 18,00,000; Opening Debtors Rs.3,20,000; Closing Debtors Rs.4,00,000; Provision for Doubtful Debts Rs. 60,000. Trade Receivables Turnover Ratio will be :

a) 7.5 times

b) 9 times

c) 6 times

d) 5 times

Answer: D

Question: Credit revenue from operations Rs.24,00,000; Trade Receivables Turnover Ratio 6 times; Opening Debtors Rs.3,20,000. Closing Debtors will be :

a) Rs.4,00,000

b) Rs.4,80,000

c) Rs. 80,000

d) Rs. 7,20,000

Answer: B

Question: A firm makes credit revenue from operations of Rs.2,40,000 during the year. If the trade receivables turnover ratio is 8 times, calculate closing debtors, if the closing debtors are more by Rs.6,000 than the opening debtors :

a) Rs.33,000

b) Rs.36,000

c) Rs.24,000

d) Rs.27,000

Answer: A

Question: Opening Inventory Rs. 1,00,000; Closing Inventory Rs. 1,20,000; Purchases Rs.20,00,000; Wages Rs.2,40,000; Carriage Inwards Rs. 1,50,000; Selling Exp. Rs.60,000; Revenue from Operations Rs.30,00,000. Gross Profit ratio will be :

a) 29%

b) 26%

c) 19%

d) 21%

Answer: D

Question: Cash Revenue from Operations Rs.4,00,000; Credit Revenue from Operations Rs.21,00,000; Revenue from Operations Return Rs. 1,00,000; Cost of revenue from operations Rs. 19,20,000. G.P. ratio will be

a) 4%

b) 23.2%

c) 80%

d) 20%

 Answer: D

Question: A firm’s credit revenue from operations is Rs.3,60,000, cash revenue from operations is Rs.70,000. Cost of revenue from operations is Rs.3,61,200. Its gross profit ratio will be :

a) 11%

b) 15%

c) 18%

d) 16%

Answer: D

Question: Satisfactory ratio between Long-term Debts and Shareholder’s Funds is :

a) 1 : 1

b) 3 : 1

c) 1 : 2

d) 2 : 1

Answer: D

Question: On the basis of following data, the Debt-Equity Ratio of a Company will be: Equity Share Capital Rs.5,00,000; General Reserve Rs.3,20,000; Preliminary Expenses Rs.20,000; Debentures Rs.3,20,000; Current Liabilities Rs.80,000.

a) 1 : 2

b) .52 : 1

c) .4 : 1

d) .37 : 1

Answer: C

Question: On the basis of following information received from a firm, its Debt-Equity Ratio will be :

Equity Share Capital Rs.5,80,000; Reserve Fund Rs.4,30,000; Preliminary Expenses Rs.40,000; Long term Debts Rs. 1,28,900; Debentures Rs.2,30,000.

a) .42 : 1

b) .53 : 1

c) .63 : 1

d) .37 : 1

Answer: D

Question: Liquid Assets do not include :

a) Bills Receivable

b) Debtors

c) Inventory

d) Bank Balance

Answer: C

Question: Ideal Current Ratio is :

a) 1 : 1

b) 1 : 2

c) 1 : 3

d) 2 : 1

Answer: D

Question: Working Capital is the :

a) Cash and Bank Balance

b) Capital borrowed from the Banks

c) Difference between Current Assets and Current Liabilities

d) Difference between Current Assets and Fixed Assets

Answer: C

Question: Young India Ltd. has a Operating Profit Ratio of 20%. To maintain this ratio at 25%, management may

a) Increase selling price of Stock- in-trade.

b) Reduce Cost of Revenue from Operations.

c) Increase selling price of Stock-in-Trade and to reduce Cost of Revenue from Operations.

d) All of the above.

Answer: D

Question: A transaction involving a decrease in Debt-Equity Ratio and increase in Current Ratio is

a) issue of Debentures against the purchase of fixed assets.

b) Issue of Debentures for cash.

c) Redemption of Preference shares for cash.

d) Issue of Equity shares for cash.

Answer: D

Question: Current Ratio is 2 : 1. On the sale of fixed asset (Book value 20,000) for 18,000, state whether the Current Ratio will

a) Improve.

b) Decline.

c) Not change.

d) Can't say.

Answer: A

Question: if Revenue from Operations is l,60,000 and Gross Profit is 40,000, Gross Profit Ratio will be

a) 30%.

b) 25%.

c) 40%.

d) 50%.

Answer: B

Question: Name the difference between Capital Employed and Non-current Liabilities:

a) Shareholders’ Funds

b) Capital Employed

c) Total Debts

d) Total Assets

Answer: A