Statement Analysis Tools and Accounting Ratios Test

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Statement Analysis Tools and Accounting Ratios Test - 27

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Weekly Quiz Competition

Question 1
1 / -0

Collection of cash from debtors will cause the current ratio to ________.

A
Increase

B
Decrease

C
Have no effect

D
None of the above
Question 2
1 / -0

Given : Cash = Rs.$$5,000$$
Total liquid assets = Rs.$$40,000$$
Stock = Rs.$$20,000$$
Current assets will be ______________.

A
Rs.$$60,000$$

B
Rs.$$40,000$$

C
Rs.$$20,000$$

D
Rs.$$65,000$$
Question 3
1 / -0

If a firm has realized its debtors and has paid off its creditors to the same extent then .

A
The current ratio will increase if it was less than 1 previously

B
The current ratio will decrease if it was more than 1 previously

C
The current ratio will remain the same if it was equal to 1 previously

D
All of the above

E
Both (A) and (C) above

Solution

If the firm has realized its debtors and paid-off its creditors to same extent then the current assets will increase and the current liabilities will decrease by the same amount and consequently the current ratio will remain unchanged.
Let Current Asset be $$Rs. 500000$$ and Current liabilities be $$Rs.500000 $$
So, Current ratio = Current asset/ Current liabilities
=$$500000/500000$$
=$$1$$
Now, if the amount realized from debtors = $$Rs .100000$$ and the amount paid off to creditors is $$Rs. 100000$$ then,
New Current ratio = $$[500000-100000]/[500000-100000]$$
= $$1$$.
Question 4
1 / -0

Selling inventory on account will cause the quick ratio to __________.

A
Increase

B
Decrease

C
Have no effect

D
None of the above
Question 5
1 / -0

Which of the following is a determinant of working capital of a firm?

A
Depreciation policy

B
Taxes payable by the firm

C
Production policy

D
All of the above

E
Both (B) and (C) above
Question 6
1 / -0

In debt/equity ratio equity includes ______________.

A
Only equity capital

B
Equity and preference capital

C
Equity and preference + all reserves - losses

D
None of the above
Question 7
1 / -0

Which of the following assets are taken into account for current ratio?
1. Stock
2. Cash
3. Work in progress
4. Prepaid expenses

A
1 and 2

B
2 and 3

C
1,2, and 3

D
All of the above
Question 8
1 / -0

When fixed interest charge is Rs.$$50,000$$ and interest coverage ratio is $$10$$ times. What is the net profit before interest and tax?

A
Rs. $$5,000$$

B
Rs. $$50,00,000$$

C
Rs. $$45,00,000$$

D
None of the above
Question 9
1 / -0

Which of the following statement(s) is/are true?

A
Average collection period evaluates all aspects of credit policy

B
All other things remaining the same, issue of new shares for cash will improve the current ratio.

C
Ratio analysis is technique of planning and control

D
All of the above

E
Both (A) and (C) above
Question 10
1 / -0

Given stock turnover ratio = $$8$$ times
Average stock = Rs.$$10,000$$
Selling price = $$25\%$$ above cost
What is the amount of gross profit?

A
Rs.$$2,000$$

B
Rs.$$4,000$$

C
Rs.$$20,000$$

D
Rs.$$12,000$$

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Re-Attempt Weekly Quiz Competition

Statement Analysis Tools and Accounting Ratios Test - 27

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Statement Analysis Tools and Accounting Ratios Test - 27

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SHARING IS CARING

Question 1

Increase

Decrease

Have no effect

None of the above

Question 2

Rs.$$60,000$$

Rs.$$40,000$$

Rs.$$20,000$$

Rs.$$65,000$$

Question 3

The current ratio will increase if it was less than 1 previously

The current ratio will decrease if it was more than 1 previously

The current ratio will remain the same if it was equal to 1 previously

All of the above

Both (A) and (C) above

Solution

Question 4

Increase

Decrease

Have no effect

None of the above

Question 5

Depreciation policy

Taxes payable by the firm

Production policy

All of the above

Both (B) and (C) above

Question 6

Only equity capital

Equity and preference capital

Equity and preference + all reserves - losses

None of the above

Question 7

1 and 2

2 and 3

1,2, and 3

All of the above

Question 8

Rs. $$5,000$$

Rs. $$50,00,000$$

Rs. $$45,00,000$$

None of the above

Question 9

Average collection period evaluates all aspects of credit policy

All other things remaining the same, issue of new shares for cash will improve the current ratio.

Ratio analysis is technique of planning and control

All of the above

Both (A) and (C) above

Question 10

Rs.$$2,000$$

Rs.$$4,000$$

Rs.$$20,000$$

Rs.$$12,000$$

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