MCQS ON RATIO ANALYSIS, FINANCIAL STATEMENTS & NPA MANAGEMENT

1. Total current asset is otherwise known as

a Net working Capital b Gross Working Capital c Authorized Capital d Paid up Capital

2. Gross Working Capital is financed by following major sources

a Creditors b Promoters Contribution c Bank borrowings d All of the above

3. When stocks are overvalued the result will be

(a) Increase in Current Ratio (b) Decrease in Current Ratio
(c) Increase in Acid Test Ratio (d) Decrease in Acid Test Ratio

4. Which of the following is a situation that can be termed as negative working

capital?
a when the current ratio is below the ideal ratio of 1.33:1
b when current assets are less than current liabilities
c when current assets are more than current liabilities
d when there are losses and current ratio is 1:1

5. Which one of the following is not an intangible asset?

A. Preliminary expenses B. Pre-operative expenses
C. Accumulated debit balance of P&L account D. Prepaid expenses

6. The balance sheet of a firm has shown total assets of Rs 20Lacs .The long term uses are 11
lacs and current ratio is 1.5:1. What is the amount of current liabilities
A) Rs 11 Lacs B) Rs 9 Lacs C) Rs 6 Lacs D) Rs 4 Lacs

7. In Break Even Analysis, the difference in selling price per unit and variable cost per unit, is
called the
A. Contribution Per Unit B. Profit Per Unit
C. Fixed Cost Per Unit D. Investment Per Unit

8. Current Ratio is not calculated as...... (i) Current Assets divided by Current Liabilities, (ii) Fixed Assets divided
by Current Assets, (iii) Owned funds divided by Current Liabilities
a. Only (i) and (ii) b. Only (i) and (iii) c. Only (ii) and (iii) d. (i), (ii) and (iii)

9. In a Balance Sheet amount of total assets is Rs. 10 lac, current liabilities Rs. 5 lac and capital and reserves
Rs. 2 lac. What is the funded debt equity ratio......
a. 1:1 b. 1.5:1 c. 2:1 d. None of the above

10. The amount of instalment of a term loan is fixed at Rs. 25000/- per month and the monthly average interest
on the account is Rs. 15000/-. If the amount of depreciation is Rs. 60000/- p.a. and profit after tax Rs. 600000/-.
What is DSCR ?
a. 1.5 b. 1.75 c. 2 d. 2.5

11. If current ratio is above 2:1, it means that the firm ...... (i) Has very high investment in current assets, (ii) Does
not require working capital from the Bank, (iii) Liquidity is very high

a. Only (i) and (ii) b. Only (i) and (iii) c. Only (ii) and (iii) d. (i), (ii) and (iii

12. The long term use is 120% of long term source.This indicates the unit has
a) current ratio 1.2:1 b) Negative TNW c)Low capitalization d)Negative NWC.
13. Pre- operative expenses are shown by a company as:
a. Expenditure in the trading account b. Expenditure in the profit loss account
c. Asset in the balance sheet d. liability in the balance sheet

14. A balance sheet discloses ...

a. Cash position of the business b. Financial position of the business
c. Profit earning capacity of the business d. Risk taking capacity of the business

15. Which of the following is incorrect:

a. Patents and trademarks – intangible assets b. Goodwill- Non-current asset.
c. An intangible assets need not be written off from the books within 2 years.
d. None of the above

16. Calculate gross income from the following information sales Rs 2,00,000 sales return Rs
4,000 opening stock Rs 20,000 purchases 1,20,000 purchase returns 2,000 wages
14,000 freight 6,000 salaries 40,000 closing stock 24,000

a. Rs 60,000 b. Rs 78,000 c. Rs 1,34,000 d. Rs 62,000

17. Recovery of bad debts previously written off ......

a. Increases revenue and assets b. Increases expenses and assets

c. Decreaes assets and expenses d. Decreases revenue and assets

18. The contingent liabilities are not ...... (i) Expenses not provided, liability on account of
letter of credit, letter of guarantee, provisions not made etc., (ii) Current liabilities, which
are to be repaid immediately, (iii) Net worth of the party

a. Only (i) and (ii) b. Only (i) and (iii) c. Only (ii) and (iii) d. (i), (ii) and (iii)

19. Comparison of financial statements highlights the trend of the ...... of the business. (i)
Financial position, (ii) Performance, (iii) Profitability
a. Only (i) and (ii) b. Only (i) and (iii) c. Only (ii) and (iii) d. (i), (ii) and (iii)

20. Acid Test Ratio is also known as ………..(June 2017)

a. Liquidity Ratio b. Current Ratio c. Quick Ratio d. None of These
21. Which among the following is correct Equation?
a. Assets = Liabilities b. Assets = Capital
c. Assets + Liabilities = Capital d. Assets = Capital + Liabilities

22. Demand notice as per section 13(2) to the borrower or his agent to be served by the Bank by the
following mode. Which one is/are correct?

a. Personal delivery b. Registered post with acknowledgement due c. only A d. Both A & B

23. SARFAESIA does not apply to the following assets.

a. Total dues less than Rs1.00 lac b. Agriculture Land (Security interest created in agricultural land)
c. Lien on Goods/Pledge d. All the above
24. On payment of entire sale consideration, the assets will be sold to the purchaser/bidder, a
------------can be issued by specifying the secured assets sold, price paid and the name of the
purchaser to successful bidder

a) possession certificate b) sale certificate c) sale letter d) possession letter

25. Sale has to be conducted after the expiry of___ days, from the date of publication of sale notice
in the newspaper or service of notice to the borrower/guarantor, whichever is later

a) 30 b) 60 c) 15 d) 45

26. Which is not correct as per the norms of DRT?

a. Suit can be filed in DRT against NPA accounts where the total dues are Rs.20 lacs and more as on
date of filing of suit

b. Cases of less than Rs20.00lacs can be filed in DRT

c. Application to be filed in the form of ‘paper book’ (sufficient copies) by applicant in person or his
agent or duly authorized legal practitioner to the Registrar of DRT

d. Presiding Officer of a DRT shall be a person who shall be eligible to be appointed not below the
rank of a District Judge

27. Which committee recommended the enactment of recovery of Debts due to Banks and Financial
Institutions Act (RDDBFI), 1993?

A Rangarajan Committee b. Narasimham Committee c. Tandan Committee d. Tarapore Committee.

28. Who maintains list of professionals, who have been given license to practice as Insolvency
Resolution Professionals/liquidator?

a) RBI b) IBBI c) Ministry of Law d) IBA

29. Find the wrong one with regard to Four Pillars under IBC-2016.

a) Liquidator b) NCLT and NCLAT c) IBBI d) Insolvency Resolution Professionals

30. Depreciation is decline in the value of ………………..

a. Tangible Fixed Assets b. Current Assets c. Intangible Fixed Assets d. Debentures

1 B 2 D 3 A 4 B 5 D 6 C 7 A 8 C 9 B 10 B
11 D 12 D 13 C 14 B 15 B 16 D 17 A 18 C 19 D 20 C
21 D 22 D 23 D 24 B 25 A 26 B 27 B 28 B 29 A 30 A

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