Multiple Choice Questions

Question. 1
Current Ratio is:
(a) Solvency Ratio (d) Profitability Ratio
(b) Liquidity ratio (C) Activity ratio

Question. 2

Ideal current ratio is:

(a) 2:1 (b) 1:1 (c) 1:2 (d) 3:1

Question. 3

Non-Current Investment 18,000; Inventory

=
15,000;
22,000; Bills receivable 10,000; =

Debtors = =

Stores& spares (not included in inventory) = 5,000

Current asset will be (for the calculation of current ratio)

(c) 65,000 (d) 47,000
(a) 70,000 (b) 52,000
Question. 4

20,000; Creditors 24,000; Bill receivables =

10,000.
50,000; Term Bank loan
=
=
Short-term Borrowings =

Current liabilities will be:

b) 84,000 (c) 94,000 d) 74,000
(a) 64,000
Question. 5

Non-current asset 60,000; Current liabilities 20,000

Total asset = 1,00,000;
Current Ratio will be:
b) 5:1
(c) 2:1 (dy 1:1
(a) 3:1
Question.6
Trade investment
=
1,00,000; Current liability = 2.00.000
Total assets =
8,00,000; Fixed asset 5,00,000;
Current Ratio will be: (dy 1:1
c) 2:1
a) 3:1 (b) 5:1

8.1
 Question. 7
liability
= 000;
4,00,000;
Katio
between
Shareholders fund= 3.00.000: Non-current
1otal asset =
8,00,000;
be:
non-current asset and shareholders fund is 2:1. Current ratio will (d) 1:1
(c) 2:1
(a) 3:1 (b) 5:1

Question. 8
Current ratio will be
Debt 7 80,000.
Total Debt 1,00,000 and Long-term
A g Capital 60,000;
R (d)1:1
(a) 3:1 (b) 4:1 (c)2:1

Question. 9

the year amounting

to 0,000 would
Current ratio of the company is 2:1. Redemption of debenture during
result in
(a) Increase in Current ratio (b) Decrease in Current ratio

(c) No Change in current ratio (d) Both a and b

Question. 10
Current ratio of the company is 2:1. Sale of Non-current investment 7 10,000 would result in:
(a) Increase in Current ratio (b) Decrease in Current ratio
(c) No Change in current ratio (d) Both a and b

Question. 11

Current ratio of the company is 2:1. B/R endorsed to ereditors are dishonoured amounting to 10,000
would result in
(a) Increase in Current ratio (b) Decrease in Current ratio
(c) No Change in current ratio (d) Both a and b

Question. 12
Current ratio of the company is 1:1. Purchase of Loose Tools for 7
(a) Increase in Current ratio
10,000 against cheque would result in:
(b) Decrease in Current ratio
(c) No Change in current ratio (d) Both a and b
Question. 13
Current ratio of the company is 1:1. Sale of goods tor R 2,00,000
(Cost 1,50,000) would result
(a) Increase in Current ratio in:
(b) Decrease in Current ratio
(c) No Change in current ratio
(d) Both a and b
Question. 14
Which of the following transaction will
improve the
current ratio (f current ratio
(a) Cash collected from trade receivable is 2:1):
(b) Purchase of
(c) Payment of trade payables goods for cash
d credit purchase of goods
 Question. 15
The ratio of Current Assets
(7 10,00,000) to Current Liabilities (7 4,00,000) is 2.5 1. The accountant of the
rm is interested in maintaining a Current Ratio of 1.8 1, by acquiring some Current Assets on Credit.
Current asset
(a) 3.50,000 acquiredwill be:
(b) 2.80,000
(c)1.50,000 (d) 3,00,000
Question. 16
* atio of Current Assets ( 6,00.000) to Current Liabilities
snterested in maintaining a Current Ratio of 2: 1, by paying 5,00,000) is 1.2 :1. The accountant of the
Current liability paid will off a part of the Current Liabilities.
(a) 3,00,000 be:
b) 2,00,.000 (c) 1,00,000 (d) 4,00,000
Question. 17
Liquid assets do not
(a) Bill receivable include:
b) Debtors
(c) Prepaid expense (d) Bank balance
Question. 18
Current Assets R
40,000;
Liquid ratio will be: Inventory 7 12,000; Prepaid Expenses
2,000 and Working Capital R 30,000.
(a) 4:1 (b) 2.61
(c) 2.8: 1 (d) 1.4:1
Question. 19
Working Capital 7 2,50,000; Total Debts
Prepaid Expenses 10,000. 7 3,00,000; Long-term Debt 2,20,000; Inventory 2,00,000;
Liquid ratio will be:
(a) 1.5: 1
(b) 3.125: 1
(C) 4.125:1 (d) 1.625 : 1
Question. 20
Working Capital 2,50,000; Current ratio 2.6:1;
Liquid ratio will be: Prepaid expense 6,250.
(a) 1.56:1 (b) 1.6:1 (c) 2.56:1 (d) 2.61
Question. 21
LAguid ratio 1.6:1; current ratio 2:1;
Current liabilities will be:
inventory 2,00,000.
(a) 5,00,000
(b) 10,00,000 (c) 8,00,000
(d) 4,00,000
Question. 22
orking Capital.30,000; current ratio 3:1
TTent
liabilities will be
ay 7,500
b) 15,000 (c) 22.500 (d) 30,000
 Question. 23
Current Ratio 3:1;
Quick ratio 1.2:1. If a
working capital is 1,50,000.
Inventories will be:
(a) 2,25.000
(b) 90,000 (c) 1,35,000 (dy 45,000

Question. 24
KIshi td. has
Inventory of 2,25,000. Liquid asset 1,50,000 and quick ratio is 2:1.
Current ratio will be:
(a) 2:1
(b) 3:1 (c) 4:1 (dy 5:1

Question. 25
On the basis of
following data, the liquid ratio of
Current Ratio 5: 3: Current a
company will be:
Liabilities 90,000 and
(a) 2:1 Inventory 30,000
b) 1:2
(c) 3:4 (d) 4:3
Question. 26
Current ratio of a firm is 5 :2. Its current
Its liabilities are 7 60,000. Inventory
Liquid Ratio will be: is 30,000.
(a) 2:1
(b) 1:2
(c) 2:5 (d) 5:2
Question. 27
Total asset
10,00,000; Non-current asset
=

6,00,000; Shareholders fund

=
1,00,000; Non-current liability =
4,00,000; Reserve &
Current Ratio will be
3,00,000 =
surplus
(a) 2:1
(b) 1:2
(c) 3:4
(d) 4:3
Question. 28
Working Capital 5,40,000; Current Ratio 2.5
1; Inventory 2,50,000.
Quick Ratio will be
(a) 1.44:1
(b) 1.38:1
(c) 2.5:1
(d) 1.81:1
Question. 29
Quick Ratio 1.5; Current
Assets 1,00,000;
Inventory will be: Current Liabilities 7 40,000.
(a) 60,000
(b) 1,00,000
(c) 40,000
(d)1,40,000
 ccounting Ratios 8.5
Question. 30
Match the followings:
u
Cntasset 2,00,000; Current Liability 1,00,000. Current ratio will be:
Sale of goods for 50,000 (Cost 7 45,000). (a) 3:1
) Bl Receivable endorsed to a Creditor amounting to (b) 1.67:1
(3) B/R 0,000.
dishonoured at maturity amounting to 50,000. (c) 4:1
Acdemption of Debentures amounting to 7 50,000 by way of issue of equity share. (d) 2.05:1
(a) 1-(b);
(c) 1-(d);
2-(c); 3-(d): 4-(a)
(b) 1-(b); 2-(d); 3-(a); 4-(c)
2-(a); 3-(b); 4-(c)
(d) 1-(d); 2-(c); 3-(a); 4-(b)
Question. 31
Match the followings:
(1) Current asset - Current Liability
(2) Current (a) Total debt
asset stock prepaid
expense advance
-

tax
(b)Working capital
(3) Total asset
shareholders fund
(c) Current liability
(4) Total asset
capital employed (d) Liquid asset
(a) 1-(b); 2-(c); 3-(d); 4-(a)
(c) 1-(d): 2-(a); 3-(b); 4-(c) (b) 1-6); 2-(d); 3-(a); 4-(c)
(d) 1-d); 2-(c); 3-(a); 4-(b)
Question. 32
Match the followings:
If current asset is 5,00,000 and current liability is 2,00,000. Current ratio will be
(1) Sale of fixed asset (Book value 50,000) in 60,000 (a) 2.45: 1
(2) Sale of fixed asset (Book value 60,000) in 50,000 b) 2.8:1
(3) Sale of goods (Book value 60,000) in 50,000
(c) 2.55:1
4) Sale of goods (Book value 50,000) in 60,000 (d) 2.75:1
(a) 1-(b); 2-(c); 3-(d): 4-(a) (b) 1-(b); 2-(d); 3-(a); 4-(c)
(c) 1-(d); 2-(a); 3-(b); 4-(c) (d) 1-(d; 2-(c); 3-(a); 4-(b)

SOLVENCY RATIOS
 8.6
Question. 34

Debt equity ratio is calculated by using the formula:

Debt/ 'Total asset
(a) Debt Equiry Total asset (d)
(b) Total Asset Debt (C) Equity/

Question. 35
50,D0U. Debt will be
Long term Borrowings 1,20,000: Long term Provisions 80.000: Short term provision
(d)1.30,000
(a) 1.20.000 b) 2.00.000 (c) 2.50,000

Question. 36

Debentures Loan from Bank 2.00.000: 9% Bonds 1,00,000; Short term provision s0,000.
0 5,00,000; Term
Amount of Debt will be:
(a) 7.00.000 (C) 8,50,000 ()5,00,000
b) 8,00,000
Question. 37

Total Debt 2,60,000; Current Liabilities 40,000.

Amount of Debt will be:
(a) 2.60.000 b) 40,000 (c) 2,20,000 (d) 3,00,000

Question. 38

Total Debt 15,00,000; Trade Payables 2,00,000; Outstanding Expenses 25,000; Bank Overdraft 2,50,000.
Amount of Debt will be:
(a) 12,50,000 (b) 10,25,000 (c) 12,75,000 (d) 10,50,000
Question. 39

Capital employed is equal to:

(a) Total asset total debt
(b) Total asset current liability
(c) Sharehoiders fund + Current liability
(d) Shareholders fund + Non-current liability + current liability

Question. 40

Total Debt 15,00,000; Working Capital 2,50,000; Current Assets 4,40,000

Amount of Debt will be:
(a) 13,10,000 6) 12,50,000 (c) 10,60,000 (d) 15,00,000
Question. 41

Capital Employed 50,00,000; Shareholders' fund 32,00,000; Current liabilities 8,00.000,

Amount of Debt will be:
(a) 32,00,000 (b) 18,00,000 (C) 10,00,000 (d) 42,00,000
 Accounting Ratios 8.7
Question. 42

Share Capital 10,00,000; Reserve & Surplus 2,00,000; Current Liabilities 70.000: Non current liability
3.30,000.
Shareholders fund will be:
(a)16,00.000 (d 15.30.000
(b) 12,70,000 (c) 12,00.000

Question. 43
Equity Sare Capital 3,00,000; Preference Share Capital 1,00,000; General Reserve 1.20,000: Securities

Premium Reserve 50,000; Profit & Loss Balance (Dr) 30,000.

Shareholders fund will be:
(a) 4.40.000 (b) 5,70,000 (c) 6,00,000 (d 5.40.000

Question. 44

Land &Building 12.00.000

Plant &Machinery 7.00.000
Intangible Assets 2.00.000
Inventories 6,00.000
Trade Receivables 2.00.000

Trade Payables 1.80.000

Total debt .00.000

Shareholders fund will be:
(a) 29,00,000 (b) 24,00,000 (c) 22.20,000 (d 25.80.000

Question. 45

Total Assets 9.00.000

Total Debt 3.40.000

Current Liabilities 40.000

Shareholders fund will be:

(a) 5,60,000 (b) 5,20,000 (c) 6,00,000 (d 5.00.000
Question. 46

12.00.000
Fixed Assets
Non-Current Investments 3.00.000

Current Assets
8.00.000

Total Debts
9.50.000

Trade Payables 40.000

5.000
Outstanding Expenses
Bank Overdraft $5.00
 Shareholders fund will be:
(a) 20,50,000 b) 16,00,000 (c) 11,00,000 (d) 13.50,000

Question. 47

Capital Employed 36,00,000

Non-current liability 12,00,000

Current Liabilities 5,00,0000

Shareholders fund will be:

(a) 24,00,000 (b) 19,00,000 (c) 29,00,000 (dy 31,00,000

Question. 48

Equity Share Capital 2,00,000

Preference Share Capital 2,00,000
General Reserve
1,00,000
Securities Premium Reserve
70,000
Statement of Profit & Loss (Profit)
70,000
10% Debentures
4,00,00%)
Term Loan from Bank
4,00,00)
Current Liabilities
20,000
Debt Equity Ratio will be:
(a) 1.25:1 b) 0.8:1 (C) 1.28:1
(d 0.78:
Question. 49
Total Assets
Total Debt
7,00,00X)
2,50,000
Current Liabilities
Debt Equity Ratio will be:
50,000
(a) 0.44 :1 (b) 0.56:1 (c) 0.67:1
(d 0.36:1
Question. 50
Shareholder's Funds
10.00 0K)
Total Debts

Current Liabilities 12,(,00

Debt Equity Ratio will be: 4,00,000
(a) 1.2:1 (b) 1.25:1
c0.8:
d 83:1
 Question. 51
Capital Employed

Shareholder's Funds 25,00,000

Current Liabilities 20,00,000
Debt Equity Ratio will be: 4.80,000
(a) 0.19:1 (b) 0.24:1
(c) 0.20:1 (d 0.25:1
Question. 52
Total asset to debt ratio is a :
(a) Solvency Ratio
6) Liquidity ratio
(c) Activity ratio (d) Profitability Ratio
Question. 53
Total Debt 30,00,000;
Shareholder's Funds 18,00,000: Reserve &
Working Capital 9,00,000. Surplus 6,00,000; Current Assets
Total asset to debt ratio will be:
15,00,00
(a) 2:1
(6) 1.6:1
(c)1:2 (d) 2.5:1
Question. 54
Long-Term Borrowings
1,00,000
Long-Term Provisions
50,000
Current Liabilities
25,000
Non-Current Assets
1,80,000
Current Assets
45,000
Total asset to debt ratio will be:
(a) 9:1 (b) 1.25:1 C)1.5:1 (d) 0.67 :1
Question. 55
Debt equity ratio = 2:1; Total asset to debt ratio = 2:1; Total asset = 4,00,000

Shareholders fund will be:

(a) 1,00,000 (b) 2,00,000 (c) 4,00,000 (d) 8,00,000
Question. 56

Current Liabilities 30,000.

Tota
1 Assets 2,00,000; Total Debt 7 1,20,000;
lotal asset to debt ratio will be:
20:3 (d) 3:20
(a) 20:9 (b) 9:20
 8.10

Question. 57
Shareholders fund 30,00,000; Reserve & surplus 12,00.000: Total debt 25,00,000: Trade payable 5.60,000
Bank Overdraft 40,000.
Total asset to debt ratio will be:
() 3:1
(a) 2.89:1 (b) 0.55:1 (c) 0.63:1

Question. 58
otal Debt R 7,00,000; Share Capital 15,00,000: Reserve and Surplus 7 10,00,000; Current Llabilities

5,00,000; Working Capital R 7,00,000.

Total asset to debt ratio will be:
(a) 0.78:1 (d) 1:16
b) 1.28:1 (c) 16:1

Question. 59
Debt equity ratio = 2:1; Total asset to debt ratio = 1:1; Total asset = 4,00,000
Proprietary ratio will be:
(a) 2:1 b) 0.5: 1 (c) 3:1 (d) 0.67:1

Question. 60

6% Debentures 10,00,000
Loan from IDBI 12.00,000
Trade Payables
15,00,000
Equity Share Capital
30,00,000
Reserves
10,00,000
Statement of Profit & Loss (Profit)
5,00,000
Goodwill
8,00,000
Other Non-Current Assets
45,00,000
Current Assets
29,00,0000
Proprietary ratio will be:
(a) 0.55:1 (b) 1.82:1 ()1:1 (d) 0.82:1
Question. 61

Equity Share Capital

25,00,000
6% Preference Share Capital
8,00,000
General Reserve
10,00,000
Statement of Profit & Loss (Loss)
(7,00,000)
Fixed Assets
30,00,000
Proprietary Ratio
0.75:1
AcCO

asset will be 8.11

Current
(a) 6,00,000
b) 12,00,000
(c) 18,00,000 (d) 24,00,000

Question. 62
Net Profit after Interest and Tax
1,20,000
Rate of Income Tax
12% Debentures 50%
10% Mortgage Loan 1,00),000

1,00,00)

Interest coverage ratio will be:

(a) 11.91 times
(b) 21 times (c) 25 times (d) 6.45 times

Question. 63
Net Profit after Interest and Tax
1,20,000
Rate of Income Tax
50%
10% Debentures

Interest coverage ratio 3 times

Interest on 10% debenture will be:
(a) 1,20,000 6) 1,00,000 (c) 1,40,000 (d) 80,000
Question. 64

Match the followings:

1 Debt equity ratio (a) Net profit before interest and tax/Fixed interest charges

2 Total asset to debt ratio (b) Debt/ Equity

(c) Total asset/ debt

3 Proprietary ratio
(d) Equity/ Total asset
4 Interest coverage ratio

(b) 1-4b): 2-(d); 3-(c); 4-(a)

(a) 1-(b); 2-(c); 3-(d): 4-(a) (d) 1-d); 2-(c); 3-(a); 4-(b)
(c) 1-d); 2-(b); 3-(c); 4-(a)
ACTIVITY RATIOS

Question. 65

inventory ?? 25,000; Purchases 90,000; Wages 10,000; Carriage

25,000; Puro
Closing inventory
Ope
Pening inventory 7 15,000; 2 . 0 o 0 : Revenue
Revenue from operat.
2,000;
operations 1,20,000; Carriage inwards 7 4,000;
outwards7
S5,000; Returns

Rent 5,000. operation will be:

Cost of evenue from (b) 1,22,000
(c) 94,000 (d) 92,000
(a) 1,27,000
 8.12
Question. 66
of
Gross profit ratio is
25% on cost
reveni
Credit sales 1,00,000; cash sales 80,000: Return inward 30.000:
from operation.
Cost of revenue from operation will be (d 1,10,000
(b) 1,25,000 (c) 1,20,000
(a) 1,50.000
Question. 67

Revenue from Operations (Sales) 3,20,00;

Opening Inventory 7 52,000; Closing Inventory 50,400;
Gross Profit Ratio 20% on Revenue from Operations.
Inventory Turnover ratio will be: (d) 4 times
(c) 7 tines
(a) 5 times (b) 6 times

Question. 68

28,000
Opening Inventory
52,000
Closing Inventory
6,00,000
Cost of Revenue from Operations
25% on cost of revenue from operations
Gross Profit
Inventory Turnover ratio will be:
(c) 15 times (d) 16 times
(a) 17.75 times (b) 18.75 times

Question. 69

Cost of Revenue from Operations (Cost of Goods Sold)6,00,000

Purchases
5,80,000

Direct Expenses 40,000

Opening Inventory 70,000

Closing Inventory will be:

(a) 90,000 b) 50,000 (c) 20,000 (dy 70.000
Question. 70

Revenue from Operations (Sales) ? 16,00,000; Average Inventory 1,76,000; Gross Loss Ratio 10%.

Inventory turnover ratio will be:

(a) 9 times (b) 9.10 times (c) 8.18 times (d) 10 times
Question. 71

Revenue from Operations: 7 2,00,000; Gross Profit: 25% oncost; Opening Inventory was Half of the value
20% of Revenue from Operations.
Closing Inventory. Closing Inventory
was
of
Inventory turnover ratio will be:
(b) 8 times (c) 5.33 times (d) 4.33 times
(a) 4 times
 Question. 72
of Revenue fro
rom Operations 7 6,40,000; Gross Profit 25 on Cost; Closing Inventory is 4 tines
a s t

pening
aing Inventor: ory; Opening Inventory: 10% of Revenue from Operations.
oatory turnover ratio will be:
(a) 3.2 times (d) 4 times
(b) 8 times (c) 2 times

Question. 73
is 10,000
ventory turnover ratio 7 times; Cost of revenue from operation is 3,50,000;
opening inventory
Inveni

*
than the closing
e s st h a r
s
inventory.
inventory will be:
Opening
( ) 55,000
(b) 45,000 (c) 50,000
(d) 60,000

Question. 74

turnover ratio 5 times; Cost of revenue from operation is 1,50,000; Closing inventory
1s
, 5,00
Inventory
lss than the opening inventory.
Opening inventory will be: (d) 32.500
(c)30,00o
(a) 25,000 (b) 27,500
Question. 75
was 3 times
Cost of revenue from operation is 2,20,000;
closing inventory
Inventory turnover ratio 10 times;
that in the openinginventory.
Opening inventory will be: (c) 33,000 (d) 44,000
(a) 11,000 (b) 22,000
Question. 76
3 times
from operation is 2,00,000; closing inventory was

ratio 4 times; Cost of

revenue
turnover
Inventory
nore than that in the beginning.
will be: (d) 80,000
Opening inventory (b) 1,00,000
(c) 20,000
(a) 50,0000
Question. 77

Revene fron
o seing price 25% above cost. om
Inventory
turnover rato ummes
Average Inventory 60,000;
peration will be: (C) 3,60,000 (d) 5,00,000
(b) 6,00,000

(a) 4,80,000 Question. 78

.over ratio
ratio 44 time
turnover
times; Gross profit 10% of cost of revenue from operation.
Inventory
1,25,000;
nventory
Gross profit will be: (c) 12,500 (d) 40,000
(b) 80,000
(a) 50,000
 8.14

Question. 79
ror n e year
trom Operations for the year 2,00.000: Cash Revenue from Operations 70,00%
Eenue
Average trade receivable = 10,000.
Trade Receivables Turnover Ratio will be
(d) 27 times
(a) 7 times (b) 13 times (c) 20 times

Question. 80
of
Operations for the year 4,00.000: Cash Revenue from Operationsis
trom
Z0%
Tota
* Eenue
Revenue from Operations; Average
trade receivable 25,000.
=

Trade Receivables Turnover Ratio will be

(d 15 times
(a) 12.8 times (b) 16 times (C) 19.2 times

Question. 81
Credit Revenue from Operations 24,00,000; Trade receivable turnover ratio 6 timesstrade receivable beginning
of the year3,00,000.
Trade Receivable at the end of the year will be
(a) 3,00,000 (b) 5,00,000 (c) 8,00,000 (d) 1,00,000

Question. 82
A firm made credit Revenue from Operations is 78,20,000 during the year. If the trade receivables turnover
ratio is 10 times, closing trade receivables are more by 7 8,000 than the opening trade receivables.
Closing Trade Receivable will be:
(a) 78,000 b) 82,000 (c) 86,000 (d) 90,000
Question. 83
A firm made credit Revenue from Operations is 10,00,000
during the year. If the trade receivabies turnover
ratio is 10 times, closing trade receivables are three times in comparison to opening trade receivables.
Closing trade receivable will be:
(a) 50,000 b) 1,00,000 C) 1,50,000 (d 2,00,000
Question. 84
A firm made credit Revenue from Operations is R 10,00,000 during the year. If the trade receivables turnover
ratio is10 times, closing trade receivables are two times more in
comparison to opening trade receivables.
Closing trade receivable will be:
(a) 50,000 (b) 1,00,000 (c) 1,50,000
(d) 2,00,000
Question. 85
A firm made credit Revenue from
Operations is 10,00,000 during the year. If the trade receivables turnover
ratio is 10 times, closing trade receivables are 1/3rd of opening
trade
Closing trade receivable will be:
receivables.
(a) 50,000 (b) 1,00,000 (c) 1,50,000
(d 2,00,000
 Accounting Ratios
Question. 86

revenue from operation is 25%

A firm made Revenue from Operations is 10,00,000 during the year. Cash
trade receivables are
of eredit revenue from operation; Trade receivables turnover ratio is 5 times, closing
1/4th of opening trade receivables.
Closing trade receivable will be:
(c) 3,20,000 (d) 32,000
(a) 64,000 (b) 2,56,000
Question. 87
from operation
times; Average trade receivable 80,000; Cash
revenue
Trade receivable turnover ratio 6
25% of total revenue from operation.
Cash revenue from operation will be:
(b) 3,20,000 (c) 4,80,000 (d) 6,40,000
(a) 1,60,000
Question. 88
from operation; Cash revenue
Cost of Revenue from operation 10,00,000; Gross profit 20% on revenue
ratio 10 times; closing trade
from operation 20% of total revenue from operation; Trade receivable turnover
receivables are 1/4th of opening trade receivables.

Closing trade receivable will be:

(a) 40,000 (b) 80,000 (c) 1,20,000 (d) 1.60,000

Question.89
Credit purchase during the year 10,00,000; Opening creditors 80,000; Closing creditors 1,20,000.

Trade payable turnover ratio will be:

(a) 12.5 times (b) 10 times (c) 8.33 times (d) 15 times

Question. 90

Total purchase during the year 10,00,000; cash purchase is 25% of total purchase. Opening creditors 1,30,000;
Closing creditors 1,70,000.
Trade payable turnover ratio will be:
(a) 6.67 times (b) 7.69 times (c) 5.89 times (d) 5 times

Question. 91

Total purchase during the year 12,00,000; cash purchase is 25% of Credit purchase. Opening creditors
1,00,000; Closing creditors 1,40,000.
Trade payable turnover ratio will be:
(a) 8 times (b) 9.6 times (c) 6.86 times (d) 7 times

Question. 92

Total purchase during the year 2,00,000; cash purchase is 25% of Credit purchase. Opening creditor was 2
times of closing creditor; Opening creditor 50,000.
Trade payable turnover ratio will be
(a) 4.27 times (b) 2.67 times (c) 3 times (d) 4 times
 .16 VINESH Target Ultimate Accountancy

Question. 93
Credit revenue from operation 15,00,000; Cash revenue from operation 256 of total revenue from
om operation:
Liquid asset 2,00,000; Inventory 1,00,000; Current liability
Working capital turnover ratio will be: 1,20,000.
(a) 8.33 times (d) 12.22 times
b) 6.67 times (c) 11.1l times

PROFITABILITY RATIOS

Question. 94
Which of the
following ratio is not covered under profitability ratio?
(a) Gross Profit Ratio (6) Proprietary ratio
(c) Return on investment ratio
(d) Operating profit
Question. 95
Gross Profit ratio will be:
(a) Gross Profit/cost of revenue from
operation (b) Gross Profit/ revenue from operation
(c) Net Profit/cost of revenue from
operation (ad) Net Profit/revenue from operation

Question. 96
Opening inventory 50,000; Purchases 3,00,000; return outward 10,000;
12,000; Revenue from operation 5,40,000; Closing inventory 60,000. Wages 10,000; Carriage outward
Gross profit will be
(a) 2,50,000 (b) 2,38,000 (c) 2,30,000 (d) 2,60,000
Question. 97
Net profit after tax 1,20,000, Tax rate 40%, Salary 10,000; wages 25,000;
Gross profit will be: carriage outward 30,000.
(a) 2,40,000 (b) 4,15,000 (c) 4,35,000 (d) 4,60,000
Question. 98
Credit revenue from operation 5,00,000; Cash revenue from operation-20%
Excess of closing inventory over opening inventory 75,000; Purchases 4,55,000.of total revenue from operation;
Gross profit ratio will be:
(a) 30% (b) 40%
(c) 38.20%
(d) 39.20%
Question. 99
Credit revenue from operation 5,00,000; Cash revenue trom
Excess of opening inventory operation- 20% of total revenue from tion
over closing inventory 75,000; Purchases opera
Gross profit ratio will be: 3,62,500.
(a) 30% (b) 40% (c) 38.20%
(d) 39.20%
 Accounting Ratios

8.17
Question. 100
Gross profit ratio is
25%, Purchase of stock
(a) Increase the gross profit ratio wouid result in
(c) No change in Gross (b) Decrease the gross
profit ratio profit ratio
(d) Both a and b

Question. 101
Gross profit ratio Is 25% on cost. Revenue from
Gross profit will be: operation 10,00,000.
(a) 2.00.000
(b) 2,50,000
(c) 3,33,333 (d 1,80.000
Question. 102
Opening inventory 10,000; Closing inventory 20,000;
above cost.
Inventory turnover ratio 5 times; Selling price 1/3rd

Gross profit ratio will be:

(a) 33.33 (b) 25% (c) 50% (d 16.67
Question. 103
Operating ratio will be:
(a) (Cost of revenue from operation-Operating expense-operating income)/(Revenue from operatin)
(b) (Cost of revenue from operation-Operating expense +operating income)/(Revenue from
operation
) (Cost of revenue from operation+Operating expense-operating income)/(Revenue from operation)
d) (Cost of revenue from operation +Operating expense +operating income/(Revenue from operation)
Question. 104

Revenue from operation 10,00,000; Gross profit 25% on cost; Depreciation 10,000; selling expense 40,000;
Administration expense 50,000.
Operating ratio will be: (c) 20% (d) 80%
(a) 90% (b) 10%

Question. 105

Gross profit 25%; Depreciation 50,000; selling expense 90,000

Revenue from operation 10,00,000;
Lose on sale of asset 10,000.
50,000;
Administration expense

Operating ratio will be:

(b) 6% (c) 80% (d) 20%
(a) 94%
Question. 106

will be:
Operating profit ratio operation) x 100
from
(a) (Operating profit)/(Revenue from operation) x 100
of Revenue
b) (Operating profit)/(Cost
cost)/(Revenue from operation) x 100
(c) (Operating from operation) x 100
of Revenue
(d) (Operating cost)/(Cost
 Question. 10
Revenue from operation 10,00,000; Gross profit 25% on cost; Operating expense 50,000. OperainE prolit
ratio will be:
(a) 15% (b) 20% (c) 25% (d) 30%

Question. 108
Which of the following is not of
a part operating ratio:
(a) Office expense (b) Administration expense (c) Selling expense (d) Loss by fire

Question. 109
Revenue trom operation 10,00,000; Cost of revenue from operation 6,00,000; Operating expense (including
lossby fire 20,000) 80,000; Operating income 30,000.
Operating profit ratio will be:
(a) 63% (b) 37% (c) 60% (d) 40%

Question. 110
Which of the following is a non-operating income:
(a) Gain on sale of Fixed asset b) Interest received on investment
(c) Commission received (d) Both (a) and (b)

Question. 111
Which of the following is a operating income:
(a) Profit on sale of Fixed asset (b) Interest received on investment
(c) Commission received (d) Both (a) and (b)

Question. 112
Net profit 5,00,000; Dividend received 50,000; Profit on sale of furniture 10,000; Interest on debenture
70,000; Bad debt 20,000; Revenue from operation 12,00,000.
Operating profit ratio will be:
(a) 42.5% b) 40.83% (c) 39.17% (d) 41.67%
Question. 113
Net profit ratio will be:
(a) (Net profit)/(Revenue from operation) x 100
(b) (Net profit)/(Cost of Revenue from operation) x 100
(c) (Gross profit)/(Revenue from operation) x 100
(d) (Gross profit)/(Cost of Revenue from operation)x 100

Question. 114
Revenue from operation 5,00,000; Cost of revenue froi operation 3,00,000;
Operating expense 30,000; Not
operating expense 10,000; operating income 15,000; Non operating income 5,000.
 Accounting RatiOS O.t

Net profit ratio will be:

(a) 37% (b) 39% (c) 36% (d) 38%

Question. 115

10,000; Non operating expense 5,000; revenue from operation

Oet E proit 20,000; Operating expense
50,000.
Net profit ratio will be:
(a) 30% (b) 50% (c) 40% (d) 20%

Question. 116
Net Profit after Interest and Tax 6,00,000; 10% Debentures 10,00,000; Tax @ 40%; Capital Employed
80,00,000.
Return on investment will be:
(a) 12.50 % (b) 8.75 % (c) 13.75 % (d) 7.5 %

Question. 117

Net Profit after Interest before Tax 7 4,00,000; 10% Debentures 10,00,000; Tax 60%; Shareholders
will be:
fund 20,00,000; Reserve & surplus 10,00,000; Non-current liability 10,00,000. Return on investment
(d) 10 %
(a) 3.67 % (b) 8.75 % (c) 16.67 %

Assertion & Reason Based Questions

Question. 118

Assertion (A) :
While calculating the Current Ratio, Loose Tools and Stores & Spares are not included in the current asset.

Reason (R):
Loose Tools and Stores & Spares are not held for sale or conversion into cash.

Choose the Correct Option from the following.:

(a) Assertion and Reason both are correct and Reason is the correct explanation of assertion
(b) Assertion and Reason both are correct
but Reason is not correct explanation of assertion
(c) Only Assertion is correct.
Assertion is not correct
(d) Reason is correct but
Question. 119

Assertion (A):
IfCurrent Ratio is 2:1. Current maturity of long-term debts i.e. Redemption ofdebentures in the current year, will
increase the Current Ratio.

Reason (R) :
will decrease and there is no impact on current liabilities.
Current assets
 8.20

Choose the Correct Option

from the following:
(a) Assertion and Reason both are correct and Reason is the correct explanation or
(b) Assertion and Reason both are correct but Reason is not
asse
correct explanation ol
as
(c) Only Assertion is correct
(d) Reason is correct but Assertion is not correct

Question. 120

Assertion (A):
If Current Ratio of a
company is 1:1. Its Net working capital will be Zero.
Reason (R) :
When Net Working Capital is Zero, it will reduce the Current Ratio of the
Company
Choose the Correct Option from the
following:
a) Assertion and Reason both are correct and Reason is the correct explanation of assertion
(0) Asertion and Reason both are correct but Reason is not correct explanation of assertion
(c) Only Assertion is correct
(d) Reason is correct but Assertion is not correct

Question. 121
Assertion (A):
Debt Equity Ratio of Vinod Ltd. is 2:1. If a Machinery is
purchased by the company by issuing 2,00,000 Equity
Shares to the Vendors of Machinery, Debt Equity will Decrease.

Reason (R) :
No Change in Debt but Equity is increased.

Choose the Correct Option from the following:

(a) Assertion and Reason both are correct and Reason is the correct explanation of assertion
(b) Assertion and Reason both are correct but Reason is not correct explanation of assertion
(c) Only Assertion is correct
(d) Only Reason is correct

Question. 122

Assertion (A) :
Goods sold for Cash at cost price, will not increase the Gross Profit Ratio.

Reason (R):
Revenue from operation will increase but clos1ng inventory will decrease with the same amount.
Choose the Correct Option from the following:
(a) Assertion and Reason both are correct and Reason is tne correct
explanation of assertion
(b) Assertion and Reason both are correct but Reason is not correct explanation of
assertion
(c) Only Assertion is correct
(d) Only Reason is correet
Accounting Ratios 8.21

Question. 123

Assertion (A) :
If a company has ideal Current Ratio and it further purchased goods on credit, the Current Ratio will decreas
Reason (R) :
The Ideal Current Ratio of the company is 2:1.

Choose the Correct Option from the following:

(a) Assertion and Reason both are correct and Reason is the correct explanation of assertion
(b) Assertion and Reason both are correct but Reason is not correct explanation of assertion
(c) Only Assertion is correct
(d) Only Reason is correct