CBSE Class 12 Accountancy Accounting Ratios MCQs Set 04

Question. Long term creditors are those creditors who provide funds for
(a) More than one year
(b) Only one year
(c) More than one year and Only one year
(d) None of the options

Answer : A

Question. Average Inventory is equal to
(a) Opening stock + Closing stock/2
(b) Opening stock – Closing stock/2
(c) Opening stock + Closing stock/2 and Opening stock – Closing stock/2
(d) None of the options

Answer : A

Question. Equity ratio relates to
(a) Shareholders funds to total assets
(b) Shareholders funds to total Liabilities
(c) Shareholders funds to total assets and Shareholders funds to total Liabilities
(d) None of the options

Answer : A

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. 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. A Company’s liquid assets are Rs.5,00,000 and its current liabilities are Rs.3,00,000.Thereafter, it paid Rs.1,00,000 to its trade payables. Quick ratio will be:
(a) 1.33:1
(b) 2.5:1
(c) 1.67:1
(d) 2:1

Answer : D

Question. On the basis of the following information received from a firm, its Proprietory Ratio will be:Fixed Assets Rs.3,30,000; Current Assets Rs.1,90,000; Preliminary Expenses Rs.30,000; Equity shareCapital Rs.2,44,000; Preference Share capital Rs.1,70,000; Reserve Fund Rs.58,000.
(a) 70%
(b) 80%
(c) 85%
(d) 90%

Answer : C

Question. Ratios which are usually calculated in times are
(a) Activity Ratio
(b) Profitability Ratio
(c) Financial Position Ratio
(d) None of the options

Answer : A

Question. Liquid Assets include :
(a) Debtors
(b) Bills Receivable
(c) Bank Balance
(d) All of the options

Answer : D

Question. The two basic components for the calculation of operating ratio are
(a) Operating cost (cost of goods sold plus operating expenses) and net sales
(b) Operating cost (cost of goods sold plus operating expenses) and Gross sales
(c) Operating cost (cost of goods sold plus operating expenses) and Net Loss
(d) None of the options

Answer : A

Question. Which ratio is not a part of Solvency Ratio?
(a) Current Ratio
(b) Debt to Equity Ratio
(c) otal Assets to Debt Ratio
(d) Proprietary Ratio

Answer : A

Question. A Company’s liquid assets are Rs.5,00,000 and its current liabilities are Rs.3,00,000. Thereafter, it paid 1,00,000 to its trade payables. Quick ratio will be:
(a) 1.33 : 1
(b) 2.5 : 1
(c) 1.67:1
(d) 2 : 1

Answer : D

Question. Operating cost – Operating Expenses = ?
(a) Cost of Revenue from Operations
(b) Gross Profit
(c) Net Profit
(d) Operating Profit

Answer : A

Question. Name the aggregate of Shareholders’ Funds and Total Debts:
(a) Total Debts
(b) Capital Employed
(c) Total Assets
(d) Non-current Assets

Answer : A

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 : A

Question. Revenue from Operations Rs.2,00,000; Inventory Turnover Ratio 5; Gross Profit 25%. Find out the value of Closing Inventory, if Closing Inventory is Rs.8,000 more than the Opening Inventory.
(a) Rs. 3 8,000
(b) Rs.22,000
(c) Rs.34,000
(d) Rs.26,000

Answer : C

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 : A

Question. Which Items Included in Current Assets for get the current ratio
(a) Trade receivables (bills receivable and sundry debtors less provision for doubtful debts)
(b) Current investments
(c) Current Stock
(d) All of the options

Answer : D

Question. Fixed Assets to Proprietors Fund Ratio is equal to
(a) Fixed Assets/Proprietors fund
(b) Fixed Assets+Proprietors fund
(c) Fixed Assets-Proprietors fund
(d) None of the options

Answer : A

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. Liquid Assets do not include:
(a) Bills Receivable
(b) Debtors
(c) Inventory
(d) Bank Balance

Answer : C

Question. A Company’s Quick Ratio is 1.5:1; Current Liabilities are Rs.2,00,000 and Inventory isRs.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. Fixed Assets Rs.5,00,000; Current Assets Rs.3,00,000; Equity Share Capital Rs.4,00,000; ReserveRs.2,00,000;Long –term debts Rs.40,000.Proprietory Ratio will be:
(a) 75%
(b) 80%
(c) 125%
(d) 133%

Answer : A

Question. On the basis of the following information received from a firm, its Total Assets-Debt ratio will be:
(a) 40%
(b) 60%
(c) 30%
(d) 70%

Answer : A

Question. Opening Inventory Rs.1,00,000; Closing Inventory Rs.1,50,000; Purchases Rs.6,00,000; CarriageRs.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. Ratios which throw light on the debt servicing ability of the businesses in the long run are known as
(a) Solvency ratios
(b) Proprietary Ratio
(c) Quick Ratios
(d) None of the options

Answer : A

Question. Average payment period 2 months hence creditors turnover will be
(a) 6 Times
(b) 5 Times
(c) 2 Times
(d) None of the options

Answer : A

Question. The current ratio explains the relationship between
(a) Current assets and current liabilities
(b) Sundry Debtors and sundry creditors
(c) Current assets and current liabilities and Sundry Debtors and sundry creditors
(d) None of the options

Answer : A

Question. Ratio of Net Sales to Net Working Capital is
(a) Working Capital Turnover Ratio
(b) Profitability Ratio
(c) Liquidity Ratio
(d) None of the options

Answer : A

Question. A high Debt to Equity Ratio means
(a) Firm is depend upon borrowings/debts
(b) Firm has no debts at all
(c) Firm is depend upon Equity only
(d) Firm is free from debts

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. A Company’s Current Ratio is 3 : 1; Current Liabilities are Rs.2,50,000; Inventory is Rs.60,000 and Prepaid Expenses are Rs. 5,000. Its Liquid Assets will be :
(a) Rs.6,90,000
(b) Rs.6,95,000
(c) Rs.6,85,000
(d) Rs.8,15,000

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 Banks
(c) Difference between Current Assets and Current Liabilities
(d) Difference between Current Assets and Fixed assets

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. On the basis of following data, the Debt-Equity Ratio of a Company will be: Equity Share CapitalRs.5,00,000; General Reserve Rs.3,20,000; Preliminary Expenses Rs.20,000; Debentures Rs.3,20,000;Preliminary Expenses Rs.20,000; Debentures Rs.3,20,000; Current Liabilities Rs.80,000.
(a) 1:2
(b) 0.52:1
(c) 0.4:1
(d) 0.37:1

Answer : C

Question. Revenue from Operations Rs.6,00,000; Gross Profit 20%; Office Expenses Rs.30,000;SellingExpenses Rs.48,000.Calculate operating ratio.
(a) 80%
(b) 85%
(c) 96.33%
(d) 93%

Answer : D

Question. Sales ratio may otherwise be called
(a) Turnover
(b) Working Capital
(c) Turnover and Working Capital
(d) None of the options

Answer : A

Question. Current assets include only those assets which are expected to be realized within……
(a) 3 months
(b) 6 months
(c) 1 year
(d) 2 years

Answer : C

Question. Revenue from Operations Rs.2,00,000; Inventory Turnover ratio 5; Gross Profit 25%. Find out thevalue of Closing Inventory, if Closing Inventory is Rs.8,000 more than the Opening Inventory.
(a) Rs.38,000
(b) Rs.22,000
(c) Rs.34,000
(d) Rs.26,000

Answer : C

Question.Total revenue from operations Rs.9,00,000; Cash revenue from operations Rs.3,00,000; DebtorsRs.1,00,000; Debtors Rs.1,00,000; B/R Rs.20,000. Trade Receivables Turnover Ratio will be:
(a) 5 Times
(b) 6 Times
(c) 7.5 Times
(d) 9 Times

Answer : A

Question. If average inventory is Rs.50,000 and closing inventory is Rs.2,000 less than the opening inventory, opening and closing inventory will be :
(a) Rs.52,000 and Rs.50,000
(b) Rs.50,000 and Rs.48,000
(c) Rs.48,000 and Rs.46,000
(d) Rs.51,000 and Rs.49,000

Answer : D

Question. Followings are the solvency ratio except
(a) Quick Ratio
(b) Total Assets to Debt Ratio
(c) Debt equity ratio
(d) Proprietary Ratio

Answer : A

Question. Following are Profitability ratios except
(a) Working capital turnover ratio
(b) Gross profit ratio
(c) Net profit ratio
(d) Operating profit ratio

Answer : A

Question. Equity Share Capital Rs.20,00,000; Reserves Rs.5,00,000; Debentures Rs.10,00,000; CurrentLiabilities Rs.8,00,000. Debt-equity ratio will be:
(a) 0.4 : 1
(b) 0.32 : 1
(c) 0.72 : 1
(d) 0.5 : 1

Answer : A

Question. Credit revenue from operations Rs.3,00,000. Trade Receivables Turnover Ratio 5; Calculate Closing Debtors, if closing debtors are two times in comparison to Opening DebtoRs.
(a) Rs.40,000
(b) Rs. 60,000
(c) Rs. 80,000
(d) Rs. 1,20,000

Answer : C

True or False:

Question. Solvency refers to the ability of the enterprise to meet its current obligations.
Answer : True

Question. Lower the Gross Profit Ratio, higher will be the profitability of a company.
Answer : False

Question. Current ratio improves with increase in sales at profir.
Answer : True

Fill in the blanks

Question.……………is the process of determining and interpreting numerical relationship between figures of the financial statements.
Answer : Ratio Analysis

Question. An ideal Quick Ratio is …………….
Answer : 1:1