CBSE Class 12 Accountancy Accounting Ratios MCQs Set F

Question. The formula for ascertaining Total Assets to Debt Ratio is:
(a) \( \frac{\text{Total Assets}}{\text{Long - term Loans}} \)
(b) \( \frac{\text{Tangible Assets}}{\text{Long - term Loans}} \)
(c) \( \frac{\text{Current Assets}}{\text{Total Liabilities}} \)
(d) \( \frac{\text{Total Assets}}{\text{Total Liabilities}} \)
Answer: (a)

Question. Proprietory Ratio indicates the relationship between proprietor’s funds and….
(a) Reserve
(b) Share Capital
(c) Total Assets
(d) Debentures
Answer: (c) Total Assets

Question. Proprietory ratio is calculated by the following formula:
(a) \( \frac{\text{Total Assets}}{\text{Long - term Loans}} \)
(b) \( \frac{\text{Tangible Assets}}{\text{Long - term Loans}} \)
(c) \( \frac{\text{Proprietor's Funds}}{\text{Total Assets}} \)
(d) \( \frac{\text{Total Assets}}{\text{Total Liabilities}} \)
Answer: (c)

Question. Which one of the following ratios is most important in determining the long-term solvency of a company ?
(a) Profitability Ratio
(b) Debt-Equity Ratio
(c) Stock Turnover Ratio
(d) Current Ratio
Answer: (b) Debt-Equity Ratio

Question. Total Assets \( Rs 8,10,000 \)
Total Liabilities \( Rs 2,60,000 \)
Current Liabilities \( Rs 40,000 \)
Debt-equity ratio is:
(a) \( 0.05 : 1 \)
(b) \( 0.4 : 1 \)
(c) \( 2.5 : 1 \)
(d) \( 4 : 1 \)
Answer: (c) 2.5 : 1

Question. Equity share capital \( Rs 15,00,000 \)
Reserve and Surplus \( Rs 7,50,000 \)
Total Assets \( Rs 45,00,000 \)
Properletory Ratio ?
(a) \( 50\% \)
(b) \( 33.3\% \)
(c) \( 200\% \)
(d) \( 60\% \)
Answer: (a) 50%

Question. Total Assets \( Rs 7,70,000 \)
Total Liabilities \( Rs 2,60,000 \)
Current Liabilities \( Rs 40,000 \)
Total Assets to Debt Ratio is:
(a) \( 3.5 : 1 \)
(b) \( 2.56 : 1 \)
(c) \( 2.8 : 1 \)
(d) \( 3 : 1 \)
Answer: (a) 3.5 : 1

Question. Profitability Ratios are generally expressed in :
(a) Simple Ratio
(b) Percentage
(c) Times
(d) None of these
Answer: (b) Percentage

Question. The ratios are primarily measures of earning capacity of the business.
(a) Liquidity
(b) Activity
(c) Debt
(d) Profitability
Answer: (d) Profitability

Question. The gross profit ratio is the ratio of gross profit to :
(a) Net Cash Sales
(b) Net Credit Sales
(c) Closing Stock
(d) Net Total Sales
Answer: (d) Net Total Sales

Question. Operating Ratio is:
(a) Profitability Ratio
(b) Activity Ratio
(c) Solvency Ratio
(d) None of these
Answer: (a) Profitability Ratio

Question. Which of the following is an operating’ income ?
(a) Sale of Merchandise
(b) Interest Income
(c) Dividend Income
(d) Profit on the sale of old car
Answer: (a) Sale of Merchandise

Question. Which of the following non-operating expense?
(a) Rent
(b) Selling Expenses
(c) Wages
(d) Loss on Sale of Machinery
Answer: (d) Loss on Sale of Machinery

Question. The following groups of ratios primarily measure risk
(a) Liquidity, activity and profitability
(b) Liquidity, activity and common stock
(c) Liquidity, activity and debt
(d) Activity, debt and profitability
Answer: (d) Activity, debt and profitability

Question. To know the return on investment, by capital employed we mean:
(a) Net Fixed Assets
(b) Current Asset-Current Liabilities
(c) Gross Block
(d) Fixed Assets + Current Assets-Current Liabilities
Answer: (d) Fixed Assets + Current Assets-Current Liabilities

Question. The term fixed assets include :
(a) Cash
(b) Machinery
(c) Debtors
(d) Prepaid Expenses
Answer: (b) Machinery

Question. Ratio based on figures of profit & loss as well a the Balance sheet are:
(a) Profitability Ratios
(b) Operation Ratio
(c) Liquidity Ratio
(d) Composite Ratio
Answer: (d) Composite Ratio

Question. Debtors Turnover Ratio :
(a) \( \frac{\text{Debtors}}{\text{Cost of Sales}} \)
(b) \( \frac{\text{Debtors}}{\text{Sales}} \)
(c) \( \frac{\text{Net Credit Sales}}{\text{Average Trade Receivable}} \)
(d) \( \frac{\text{Average Stock}}{\text{Sales}} \)
Answer: (c)

Question. When opening stock is \( Rs 50,000 \) closing stock \( Rs 60,000 \) and cost of goods sold is \( Rs 2,20,00, \) then stock turn over ratio is:
(a) \( 2 \text{ times} \)
(b) \( 3 \text{ times} \)
(c) \( 4 \text{ times} \)
(d) \( 5 \text{ times} \)
Answer: (a) 2 times

Question. What does Creditors Turnover Ratio take into account:
(a) Total credit purchases
(b) Total credit sales
(c) Total cash sales
(d) Total cash purchases
Answer: (a) Total credit purchases

Question. Cost of goods sold :
(a) Sales – Net profit
(b) Sales – Gross profit
(c) Purchases – Opening Stock
(d) None of the above
Answer: (b) Sales – Gross profit

Question. The ideal liquid ratio is :
(a) \( 2 : 1 \)
(b) \( 1 : 1 \)
(c) \( 5 : 1 \)
(d) \( 4 : 1 \)
Answer: (b) 1 : 1

Question. The ideal current ratio is :
(a) \( 2 : 1 \)
(b) \( 1 : 2 \)
(c) \( 3 : 2 \)
(d) \( 3 : 4 \)
Answer: (a) 2 : 1

Question. Operating Ratio is:
(a) Profitability Ratio
(b) Activity Ratio
(c) Solvency Ratio
(d) None of these
Answer: (a) Profitability Ratio

Question. Profitability Ratio is generally shown in :
(a) Simple Ratio
(b) Percentage
(c) Times
(d) None of these
Answer: (b) Percentage

Question. If sales is \( 7,4,20,000 \) sales returns is \( 7,20,000 \) and cost of goods sold \( 7,3,20,000 \) gross profit ratio will be :
(a) \( 20\% \)
(b) \( 25\% \)
(c) \( 15\% \)
(d) \( 10\% \)
Answer: (a) 20%

Question. Stock turnover ratio comes under :
(a) Liquidity Ratio
(b) Profitability Ratio
(c) Activity Ratio
(d) None of these
Answer: (c) Activity Ratio

Question. The satisfactory ratio between internal and external equity is. :
(a) \( 1 : 2 \)
(b) \( 2 : 1 \)
(c) \( 3 : 1 \)
(d) \( 4 : 1 \)
Answer: (b) 2 : 1

Question. Current Ratio includes:
(a) Stock
(b) Debtors
(c) Cash
(d) All of these
Answer: (c) Cash

Question. Current Ratio =
(a) Current Assets/Current Liabilities
(b) Liquid Assets/Current Liabilities
(c) Liquid Assets/Current Assets
(d) Fixed Assets/Current Assets
Answer: (a) Current Assets/Current Liabilities

Question. Liquid Assets include :
(a) Bills Receivable
(b) Debtors
(c) Cash Balance
(d) All of these
Answer: (d) All of these

Question. Which of the following assets is not taken into consideration in calculating acid-test ratio ?
(a) Cash
(b) Bills Receivable
(c) Stock
(d) None of these
Answer: (c) Stock

Question. When Cash is \( 7,10,000 \) Stock is \( 7,25,000 \), B/R is \( 7,5,000 \) Creditors is \( 7,22,000 \) and Bank Overdraft is \( 7,8,000 \) then current ratio is :
(a) \( 2 : 1 \)
(b) \( 4 : 3 \)
(c) \( 3 : 4 \)
(d) \( 1 : 2 \)
Answer: (b) 4 : 3

Question. The two basic measures of liquidity are :
(a) Inventory Turnover and Current Ratio
(b) Current Ratio and Liquid Ratio
(c) Current Ratio and Average Collection Period
(d) Current Ratio and Debtors Turnover Ratio
Answer: (b) Current Ratio and Liquid Ratio

Question. Liquidity Ratio:
(a) \( \frac{\text{Current Assets}}{\text{Current Liabilities}} \)
(b) \( \frac{\text{Current Liabilities}}{\text{Liquid Assets}} \)
(c) \( \frac{\text{Liquid Assets}}{\text{Current Liabilities}} \)
(d) None of these
Answer: (c)

Question. The term ‘Current Liabilities’ does not include: .
(a) Sundry Creditors
(b) Debentures
(c) Bills Payable
(d) Outstanding Expenses
Answer: (b) Debentures

Question. The term‘CurrentAssets’include
(a) Long-term Investment
(b) Short-term Investment
(c) Furniture
(d) Preliminary Expenses
Answer: (b) Short-term Investment

Question. Liquid Ratio is also known as:
(a) Current Ratio
(b) Quick Ratio
(c) Capital Ratio
(d) None of these
Answer: (b) Quick Ratio

Question. To test the liquidity of a concern which of the following ratios is useful ?
(a) Capital Turnover Ratio
(b) Acid Test Ratio
(c) Stock Turnover Ratio
(d) Net Profit Ratio
Answer: (b) Acid Test Ratio

Question. Which of the following transactions will improve the current ratio ?
(a) Purchase of good for cash
(b) Cash received from customers
(c) Payment of creditors
(d) Credit purchase of goods
Answer: (c) Payment of creditors

Question. Debt-equity ratio is :
(a) Liquidity Ratio
(b) Activity Ratio
(c) Solvency Ratio
(d) Operating Ratio
Answer: (c) Solvency Ratio

Question. The formula for finding out Debt-Equity Ratio is:
(a) Long-term Debts/Shareholders’ Funds
(b) Debentures/Equity Capital
(c) Net Profit/Total Capital
(d) None of these
Answer: (a) Long-term Debts/Shareholders’ Funds