MCQExams
0:0:1
CBSE
JEE
NTSE
NEET
Practice
Homework
×
CBSE Questions for Class 12 Commerce Accountancy Accounting Ratios Quiz 7 - MCQExams.com
CBSE
Class 12 Commerce Accountancy
Accounting Ratios
Quiz 7
Match List I and List II and select the correct answer using the codes given below the lists :
List I
List II
Financial leverage
Efficiently
Quick ratio
Profitability
Stock turnover ratio
Risk
Margin on sales
Liquidity
Report Question
0%
(a)-3, (b)-4, (c)-1, (d)-2
0%
(a)-4, (b)-3, (c)-1, (d)-2
0%
(a)-4, (b)-3, (c)-2, (d)-1
0%
(a)-3, (b)-4, (c)-2, (d)-1
Given that
Opening stock : Rs.$$12,000$$
Purchases : Rs.$$90,000$$
Return outward : Rs.$$2,000$$
And that the closing stock is Rs.$$2,000$$ less than the opening stock
the stock turnover ratio is _____________.
Report Question
0%
$$5$$ times
0%
$$7$$ times
0%
$$8$$ times
0%
$$10$$ times
Match List I (ratio) and List II (methods of calculation) and select the correct answer using the codes given below the lists :
List I
List II
Debt equity ratio
Total debt + pref.capital / Equity - pref capital.
Proprietary ratio
External equity / owner's equity
Capital gearing ratio
Total shareholder's funds / total assets
ROI
Profit before interest & tax / net assets
Report Question
0%
(a)-2, (b)-3, (c)-1, (d)-4
0%
(a)-2, (b)-3, (c)-4, (d)-1
0%
(a)-3, (b)-2, (c)-1, (d)-4
0%
(a)-3, (b)-2, (c)-4, (d)-1
Pay out ratio means the ratio of ____________.
Report Question
0%
Debtors to creditors
0%
Profit distributed to profit retained
0%
Earning that are distributed through dividends
0%
Interest payment to dividends
Explanation
The payout ratio is a financial metric showing the proportion of earnings a company pays its shareholders in the form of dividends, expressed as a percentage of the company's total earnings. On some occasions, the payout ratio refers to the dividends paid out as a percentage of a company's cash flow.
Therefore, C is the correct option.
Given that
Sales = Rs.$$50,000$$
Variable cost = Rs.$$20,000$$
Fixed cost = Rs.$$10,000$$
Capital employed = Rs.$$2,00,000$$
The profit volume ratio will be _________.
Report Question
0%
$$10\%$$
0%
$$15\%$$
0%
$$50\%$$
0%
$$60\%$$
Whether Debt-equity ratio will.... when purchase of a fixed asset on long term deferred payment basis?
Report Question
0%
Decrease
0%
No effect
0%
Increase
0%
None of the above
EBIT/Total Assets ratio is ______________.
Report Question
0%
Liquidity ratio
0%
Profitability ratio
0%
Solvency ratio
0%
Turnover ratio
If a bank receives a new deposit of Rs.1000 and has a cash reserve requirement of 10 per cent. Then it has Rs.900 to invest or give out as a loan. Assume the bank lends Rs.900 to a borrower who deposits the same in a bank with the same cash reserves requirement, what is the total amount of bank money created at this stage?
Report Question
0%
Rs.190
0%
Rs.1000
0%
Rs.1800
0%
Rs.1900
0%
Rs.2000
Operating ratio is given by _________________.
Report Question
0%
$$\frac{Total operating profit}{Total shareholder's equity}$$
0%
$$\frac{Total operating cost}{Total operating revenue}$$
0%
$$\frac{Total operating cost}{Total capital employed}$$
0%
$$\frac{Total operating profit}{Total operating capital}$$
Explanation
The operating ratio is calculated by dividing a property's operating expense (minus depreciation) by its gross operating income.
Operating ratio = Total operating cost/Total operating revenue
Hence b is the correct answer.
Du-pont system refers to
Report Question
0%
Stock Index in USA
0%
Stock Index in Japan
0%
Analyzing profit ratios in terms of profit margin and turnover ratios
0%
All of the above
Which ratio is used to measure the overall profitability?
Report Question
0%
Net Profit ratio
0%
Capital Ratio
0%
Current ratio
0%
All of theses
Explanation
Net profit margin is the mother of all profitability ratios and the one most commonly used by analysts. It looks at the percentage of net income to revenue.
Therefore, A is the correct option.
The most commonly used classification of ratio is
.
Report Question
0%
Activity ratios
0%
Solvency ratios
0%
Liquidity ratios
0%
All of the above
Explanation
The functional classification is based on the purpose for which the ratio is computed is and it is as follows:
Activity ratios
Solvency ratios
Liquidity ratios
Profitability ratios
When one variable is from income statement and another variable from balance sheet it is known as___________ratio.
Report Question
0%
Balance sheet
0%
Income statement
0%
Composite
0%
All of the above
Explanation
When one variable is from income statement and another variable from balance sheet it is known as composite ratio. For example Trade receivable turnover ratio is calculated using the Net credit sales figure from the income statement and the Average balance of trade receivables figure from the balance sheet.
When ratio is calculated using both figures from the income statement it is known as
.
Report Question
0%
Balance sheet ratios
0%
Income statement ratios
0%
Composite ratios
0%
All of the above
Explanation
When ratio is calculated using both figures from the income statement it is known as Income statement ratios. For example Gross profit ratio is calculated using Gross profit figure and the Net sales figure from the income statement and therefore is known as income statement ratios.
Which of the following is an example of activity ratio?
Report Question
0%
Net profit ratio
0%
Operating ratio
0%
Current ratio
0%
None of the above
Explanation
The examples of activity ratios are:
Stock turnover ratio,
Trade Receivables Turnover ratio,
Trade Payables Turnover Ratio,
Working Capital Turnover Ratio.
Hence, the correct option is D.
If fully depreciated fixed assets costing Rs.$$45,000$$ is discarded and no salvage value is realised, the current ratio will ___________.
Report Question
0%
Decrease
0%
Increase
0%
No effect
0%
None of the above
Which of the following statement(s) is / are true regarding Net Benefit Cost Ratio (NBCR)?
Report Question
0%
It does not take time value of money into consideration
0%
This criterion cannot be used when the investment outlay is spread over more than one period
0%
IF NBCR = 0.75 the project cannot be accepted
0%
All of the above
0%
Both (B) and (C) above
Explanation
Net benefit cost ratio takes into consideration the time value of money.
Net benefit cost ratio = NPV /
Investment = BCR-1
When NBCR>1 (BCR>1), the project is accepted. Therefore, a project with NBCR = 0.75 will be accepted. This criterion cannot be used when investment outlay is spread over more than one period.
When Quick Ratio $$3$$, Current Assets Rs.$$70,000$$, Inventory Rs.$$10,000$$ then the current liabilities will be __________.
Report Question
0%
Rs.$$40,000$$
0%
Rs.$$30,000$$
0%
Rs.$$20,000$$
0%
Rs.$$10,000$$
Explanation
Quick Ratio
= $$\frac{Current Assets-Inventory}{Current Liabilities}$$
3 = Rs$$\frac{70,000-10,000}{Current Liabilities}$$
3 Current Liabilities = Rs.$$60,000$$
Current Liabilities = Rs.$$\frac{60,000}{3}
= Rs. $$20,000$$
Debtors turnover ratio is ____________.
Report Question
0%
$$\frac{creditsales}{Average debtors}$$
0%
$$\frac{Total sales}{Average debtors}$$
0%
$$\frac{credit sales \times days in the year}{Debtors}$$
0%
None of the above
Explanation
Debtors turnover Ratio is used to determine the efficiency by which the business is managing the credit that is being extended to its customers and evaluate how long does it take for the business to collect the outstanding debt in the accounting period.
Debtors turnover ratio = Credit sales / Average debtors
Therefore, A is the correct option.
Formula for current ratio is
.
Report Question
0%
Current liabilities/current assets
0%
Current assets/current liabilities
0%
Fixed asset/ fixed liabilities
0%
Fixed liabilities/fixed assets
Explanation
Current ratio = Current Assets/Current liabilities
= [Inventories + Sundry Debtors + Cash and Bank balances + Receivables +
Loans and advances
+ Disposable Investments etc] /
[Creditors + Short term loans + Bank Overdraft + Cash credit+
Outstanding Expenses+ Provisions etc}
Ratio which comes under liquidity ratios is
Report Question
0%
Debt ratio
0%
Quick ratio
0%
Proprietary ratio
0%
Debt-equity ratio
Explanation
Liquidity ratio includes the following ratios :
Current ratio
Quick Ratio
Cash Ratio
Net working capital ratio
Current Assets means........
Report Question
0%
Assets which can be converted into the cash within one year
0%
Liabilities which are payable immediately
0%
Liabilities which payable after one accounting year
0%
Liabilities which are readable within 3 months
Explanation
Current assets are all the assets of a company that are expected to be sold or used as a result of standard business operations within one year. Current assets include cash, cash equivalents, accounts receivable, stock inventory, marketable securities, pre-paid liabilities, and other liquid assets.
Therefore, A is the correct option.
A person whose assets are less than business liabilities is known as insolvent.
Report Question
0%
True
0%
False
Explanation
A person or firm whose liabilities exceed the value of owned assets is termed as insolvent. It is the inabilities of the company or person to pay liabilities as they become due.
The use of Debt funds with Equity capital is described as
(i) Financial leverage
(ii) Business leverage
(iii) Trading on equity
Report Question
0%
i,ii,iii
0%
i or iii
0%
ii
0%
i or ii
Excess of liabilities over assets represents solvency of business.
Report Question
0%
True
0%
False
Explanation
The term solvency means that a company is able to pay its obligations when they come due and that a company is able to continue in business. So excess of liability over assets represents insolvency.
Return on capital is computed as ________.
Report Question
0%
Net profit / capital
0%
Gross profit / capital
0%
Net profit / sales
0%
Sales / capital
Explanation
Let Net profit = $$Rs. 120000$$ and Capital = $$Rs. 300000$$
Then, Return on capital = [Net profit/ Capital] x $$100$$
= [$$120000/300000$$] x $$100$$
= $$40\%$$
Cash in hand is the __________asset.
Report Question
0%
Least liquid
0%
Most liquid
0%
Fixed assets
0%
Intangible asset
Explanation
Quick ratio is the ratio of quick (or liquid) asset to current liabilties. It is expressed as:
Quick ratio = Quick Asset/Current Liabilities
The quick assets are defined as those assets which are quickly convertible into cash. While calculating quick assets we exclude the closing stock and prepaid expenses from the current assets. Because of exclusion liquid current asset, it is considered better than current ratio as a measure of liquidity position of the business. Cash on hand is the most liquid asset. It is also known as "Acid-Test Ratio".
The ability of the business to pay the amount due to stakeholders is calculated by ___________.
Report Question
0%
Solvency ratios
0%
Activity ratios
0%
Liquidity ratios
0%
Profitability ratios
Explanation
Liquidity ratios calculate the ability of the business to pay its due to the stakeholders. Examples of liquidity ratios are Current asset ratio, Quick ratio, Cash ratio and Net working capital ratio
If outside liabilities and owners equity are added we get _________.
Report Question
0%
Total liabilities.
0%
Net worth.
0%
Shareholder fund.
0%
Gross block.
Which of these transaction would effect current ratio
Report Question
0%
Realization of Bills receivable
0%
Discounting of Bills receivable
0%
Disposal of inventory
0%
Withdraw of cash from bank for office purpose
0:0:1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
0
Answered
0
Not Answered
0
Not Visited
Correct : 0
Incorrect : 0
Report Question
×
What's an issue?
Question is wrong
Answer is wrong
Other Reason
Want to elaborate a bit more? (optional)
Practice Class 12 Commerce Accountancy Quiz Questions and Answers
<
>
Support mcqexams.com by disabling your adblocker.
×
Please disable the adBlock and continue.
Thank you.
Reload page
