Which one of the following ratios is likely to be affected the most on account of price level changes ? (A) Current Ratio (B) Inventory Turnover Ratio (C) Debtors’ Turnover Ratio (D) Fixed Assets Turnover Ratio

Which one of the following ratios is likely to be affected the most on account of price level changes ? (A) Current Ratio (B) Inventory Turnover Ratio (C) Debtors’ Turnover Ratio (D) Fixed Assets Turnover Ratio  
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Answer: Debtors’ Turnover Ratio
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Which one of the following statements is correct ? When creditors' velocity or creditors' turnover is higher as compared to debtors' velocity, it would (A) improve liquidity (B) reduce liquidity (C) have no effect on liquidity (D) improve financial position

Description : Which one of the following statements is correct ? When creditors' velocity or creditors' turnover is higher as compared to debtors' velocity, it would (A) improve liquidity (B) reduce liquidity (C) have no effect on liquidity (D) improve financial position

Last Answer : Answer: have no effect on liquidity

The return on capital employed shows the combined effect of– (A) net profit ratio and inventory turnover ratio (B) operating ratio and net profit ratio (C) net profit ratio and capital turnover ratio (D) gross profit ratio and capital turnover ratio

Description : The return on capital employed shows the combined effect of– (A) net profit ratio and inventory turnover ratio (B) operating ratio and net profit ratio (C) net profit ratio and capital turnover ratio (D) gross profit ratio and capital turnover ratio

Last Answer : Answer: operating ratio and net profit ratio

The ratio which indicates how quickly debtors are converted into cash is--------- a) Receivable turnover ratio b) Inventory turnover ratio c) Working capital turnover ratio d) Creditors turnover ratio

Description : The ratio which indicates how quickly debtors are converted into cash is--------- a) Receivable turnover ratio b) Inventory turnover ratio c) Working capital turnover ratio d) Creditors turnover ratio

Last Answer : a) Receivable turnover ratio

Sundry Debtors – Rs.15,000 Bills Receivable (B/R) – Rs.12,500 Cash at Bank – Rs.17,500 Stock – Rs.15,000 Profit – Rs.20,000 Creditors – Rs.25,000 Bills Payable (B/P) – Rs.15,000 Sales – Rs.1,00,000 What is the Acid Test Ratio ? (A) 1•5 : 1 (B) 1•125 : 1 (C) 16 2/3% (D) 50%

Description : Sundry Debtors – Rs.15,000 Bills Receivable (B/R) – Rs.12,500 Cash at Bank – Rs.17,500 Stock – Rs.15,000 Profit – Rs.20,000 Creditors – Rs.25,000 Bills Payable (B/P) – Rs.15,000 Sales – Rs.1,00,000 What is the Acid Test Ratio ? (A) 1•5 : 1 (B) 1•125 : 1 (C) 16 2/3% (D) 50%

Last Answer : Answer: 1•125 : 1

According to Balance Sheet equation concept, the capital will be– (A) Capital = Liabilities – Assets (B) Capital = Fixed Assets – Current Assests (C) Capital = Assets – Liabilities (D) Capital = Assets + Liabilities

Description : According to Balance Sheet equation concept, the capital will be– (A) Capital = Liabilities – Assets (B) Capital = Fixed Assets – Current Assests (C) Capital = Assets – Liabilities (D) Capital = Assets + Liabilities

Last Answer : Answer: Capital = Assets – Liabilities

Which one of the following transactions changes the current ratio ? (A) Purchase of goods for cash (B) Plant acquired on account (C) Sold goods on credit (D) Debentures converted into equity capital

Description : Which one of the following transactions changes the current ratio ? (A) Purchase of goods for cash (B) Plant acquired on account (C) Sold goods on credit (D) Debentures converted into equity capital

Last Answer : Answer: Plant acquired on account

Example of leverage ratio a) Debtors velocity b) Stock turnover ratio c) Current ratio d) Solvency ratio

Description : Example of leverage ratio a) Debtors velocity b) Stock turnover ratio c) Current ratio d) Solvency ratio

Last Answer : d) Solvency ratio

Rate of Gross Profit on cost is 25%. Total sales is Rs. 1,00,000 and Average Stock is Rs. 1,60,000. Stock Turnover Ratio will be– (A) 0•5 times (B) 0•8 times (C) 0•10 times (D) 0•4 times

Description : Rate of Gross Profit on cost is 25%. Total sales is Rs. 1,00,000 and Average Stock is Rs. 1,60,000. Stock Turnover Ratio will be– (A) 0•5 times (B) 0•8 times (C) 0•10 times (D) 0•4 times

Last Answer : Answer: 0•5 times

The ratio that includes whether investment in inventory is efficiently used or not a) Inventory turnover ratio b) Working capital turn over ratio c) Fixed asset turn over ratio d) Activity ratio

Description : The ratio that includes whether investment in inventory is efficiently used or not a) Inventory turnover ratio b) Working capital turn over ratio c) Fixed asset turn over ratio d) Activity ratio

Last Answer : a) Inventory turnover ratio

The current ratio is 3 : 2 and the amount of current liabilities is Rs. 40,000. What is the amount of current assets ? (A) Rs. 60,000 (B) Rs. 70,000 (C) Rs. 80,000 (D) Rs. 1,00,000

Description : The current ratio is 3 : 2 and the amount of current liabilities is Rs. 40,000. What is the amount of current assets ? (A) Rs. 60,000 (B) Rs. 70,000 (C) Rs. 80,000 (D) Rs. 1,00,000

Last Answer : Answer: Rs. 60,000

The following data, relates to manufacturing company for the year 2006-07– Net Profit as per P & L A/c–Rs. 2,40,000; Depreciation–Rs. 80,000; Goodwill written-off– Rs. 40,000, Profit on Sale of Fixed Assets–Rs. 16,000, Proposed Dividend–Rs. 96,000. The fund from operation would be– (A) Rs. 4,40,000 (B) Rs. 4,00,000 (C) Rs. 6,40,000 (D) None of the above

Description : The following data, relates to manufacturing company for the year 2006-07- Net Profit as per P & L A/c-Rs. 2,40,000; Depreciation-Rs. 80,000; Goodwill written-off- Rs. 40,000, Profit on Sale of Fixed Assets-Rs. 16,000, ... ) Rs. 4,40,000 (B) Rs. 4,00,000 (C) Rs. 6,40,000 (D) None of the above

Last Answer : Answer: None of the above

Total sales is Rs. 7,60,000, cash sales Rs. 30,000 collection period is 25 days, debtors at Balance Sheet date will be– (A) Rs. 80,000 (B) Rs. 70,000 (C) Rs. 60,000 (D) Rs. 50,000

Description : Total sales is Rs. 7,60,000, cash sales Rs. 30,000 collection period is 25 days, debtors at Balance Sheet date will be– (A) Rs. 80,000 (B) Rs. 70,000 (C) Rs. 60,000 (D) Rs. 50,000

Last Answer : Answer: Rs. 50,000

Debtors Turnover ratio is also known as (i) Receivables turnover ratio (ii) Debtors velocity (iii) Stock velocity (iv) Payable turnover ratio A. (i) and (ii) B. (i) and (iii) C. (ii) and (iii) D. (iii) and (iv)

Description : Debtors Turnover ratio is also known as (i) Receivables turnover ratio (ii) Debtors velocity (iii) Stock velocity (iv) Payable turnover ratio A. (i) and (ii) B. (i) and (iii) C. (ii) and (iii) D. (iii) and (iv)

Last Answer : A. (i) and (ii)

Debtors turnover ratio measures---------- a) Short term solvency b) Operating efficiency c) Long term solvency d) Credit policy

Description : Debtors turnover ratio measures---------- a) Short term solvency b) Operating efficiency c) Long term solvency d) Credit policy

Last Answer : a) Short term solvency

Debtors turnover ratio is used to calculate------ a) efficiency b) solvency c) liquidity d) profitability

Description : Debtors turnover ratio is used to calculate------ a) efficiency b) solvency c) liquidity d) profitability

Last Answer : a) efficiency

Debtors turnover ratio also known as---------- a) Payable turnover b) Receivable turnover ratio c) Creators turnover ratio d) Debtors velocity

Description : Debtors turnover ratio also known as---------- a) Payable turnover b) Receivable turnover ratio c) Creators turnover ratio d) Debtors velocity

Last Answer : b) Receivable turnover ratio

Donations received for the special purpose will be taken to the– (A) Income and Expenditure Account (B) Assets side of the Balance Sheet (C) Liabilities side of the Balance Sheet (D) Receipts and Payments Account

Description : Donations received for the special purpose will be taken to the– (A) Income and Expenditure Account (B) Assets side of the Balance Sheet (C) Liabilities side of the Balance Sheet (D) Receipts and Payments Account

Last Answer : Answer: Liabilities side of the Balance Sheet

On the admission of a partner, fictitious assets are– (A) Transferred to Revaluation Account (B) Transferred to Capital Account (C) Transferred to Reserves (D) Shown in the new Balance Sheet

Description : On the admission of a partner, fictitious assets are– (A) Transferred to Revaluation Account (B) Transferred to Capital Account (C) Transferred to Reserves (D) Shown in the new Balance Sheet

Last Answer : Answer: Transferred to Revaluation Account

Which of the following is not a cash inflow? a) Decrease in debtors b) Issue of shares c) Decrease in creditors d) Sale of fixed assets

Description : Which of the following is not a cash inflow? a) Decrease in debtors b) Issue of shares c) Decrease in creditors d) Sale of fixed assets

Last Answer : c) Decrease in creditors

Which of the following is not a cash inflow? A. Decrease in debtors B. Issue of shares C. Decrease in creditors D. Sale of fixed assets

Description : Which of the following is not a cash inflow? A. Decrease in debtors B. Issue of shares C. Decrease in creditors D. Sale of fixed assets

Last Answer : C. Decrease in creditors

When an incoming partner purchases his share from any one of the existing partners, then– (A) total assets of the firm do not change (B) total assets of the firm will be augmented to the extent of payment received from the new partner (C) total assets of the firm will be reduced to the extent of payment received from the new partner (D) change in total assets of the firm will depend upon the new profit sharing ratio of the partners

Description : When an incoming partner purchases his share from any one of the existing partners, then- (A) total assets of the firm do not change (B) total assets of the firm will be augmented to the extent ... ) change in total assets of the firm will depend upon the new profit sharing ratio of the partners

Last Answer : Answer: total assets of the firm do not change

With regard to the rate of return on investment (ROI), which one of the following statements is not valid ? (A) It is an overall indicator of the profitability of an enterprise (B) It is a triangular relationship in the sense that ROI = Profit margin ×Asset turnover (C) It is a superior measure compared to the cash flow generated per share (D) It was first developed by Dupont, USA

Description : With regard to the rate of return on investment (ROI), which one of the following statements is not valid ? (A) It is an overall indicator of the profitability of an enterprise (B) It is a ... superior measure compared to the cash flow generated per share (D) It was first developed by Dupont, USA

Last Answer : Answer: It is a superior measure compared to the cash flow generated per share

Goodwill, Copyright and Trademarks should be classified as– (A) Tangible assets (B) Intangible assets (C) Current assets (D) Fictitious assets

Description : Goodwill, Copyright and Trademarks should be classified as– (A) Tangible assets (B) Intangible assets (C) Current assets (D) Fictitious assets

Last Answer : Answer: Intangible assets

For the purpose of preparation of fund flow statement, fund means– (A) Total resources (B) Cash/bank balances (C) Current Assets (D) Working capital

Description : For the purpose of preparation of fund flow statement, fund means– (A) Total resources (B) Cash/bank balances (C) Current Assets (D) Working capital

Last Answer : Answer: Working capital

Input-output analysis is most likely to yield what type of information? A)The number of employees that a firm has B)The industries that purchase the major portion of an industry's output C)The kinds of returns a firm is getting on its equipment investments D)The type of inventory turnover that is characteristic of a firm

Description : Input-output analysis is most likely to yield what type of information? A)The number of employees that a firm has B)The industries that purchase the major portion of an industry's output C ... is getting on its equipment investments D)The type of inventory turnover that is characteristic of a firm

Last Answer : B)The industries that purchase the major portion of an industry's output

Risk, as it relates to working capital, means that there is jeopardy to the firm for not maintaining sufficient current assets to . A. meet its cash obligations as they occur and take advantage of prompt payment B. discounts C. support the proper level of sales and take prompt payment discounts D. maintain current and acid-test ratios at or above industry norms E. meet its cash obligations as they occur and support the proper level of

Description : Risk, as it relates to working capital, means that there is jeopardy to the firm for not  maintaining sufficient current assets to . A. meet its cash obligations as they occur and take advantage ... above industry norms E. meet its cash obligations as they occur and support the proper level of

Last Answer : D. maintain current and acid-test ratios at or above industry norms

The Open Market Operations [OMOs] is an important tool of– (A) Forex management (B) Liquidity management (C) Inventory management (D) Marketing management

Description : The Open Market Operations [OMOs] is an important tool of– (A) Forex management (B) Liquidity management (C) Inventory management (D) Marketing management

Last Answer : Answer: Liquidity management

According to the Accounting Standard (AS)-2, the inventory is to be valued at which one of the following ? (A) Actual cost or sales value, whichever is lower (B) Historical cost (C) Net realizable value (D) Historical cost or net realizable value, whichever is lower

Description : According to the Accounting Standard (AS)-2, the inventory is to be valued at which one of the following ? (A) Actual cost or sales value, whichever is lower (B) Historical cost (C) Net realizable value (D) Historical cost or net realizable value, whichever is lower

Last Answer : Answer: Historical cost or net realizable value, whichever is lower

Lower stock turnover ratio indicates------------------------------- a) Solvency position b) Monopoly situation c) Over investment in inventory d) None of these

Description : Lower stock turnover ratio indicates------------------------------- a) Solvency position b) Monopoly situation c) Over investment in inventory d) None of these

Last Answer : c) Over investment in inventory

Current assets include A. Stores & Spare parts B. Stock in trade C. Sundry Debtors D. All of the above

Description : Current assets include A. Stores & Spare parts B. Stock in trade C. Sundry Debtors D. All of the above

Last Answer : D. All of the above

Current assets are Rs.6,00,000 current liabilities are Rs.3,00,000 the debtors realized Rs.40,000, the impact on net working capital would be------------------------- a) No change in working capital b) Decrease of working capital by Rs.80,000 c) Increase of working capital by Rs.40,000 d) None of these

Description : Current assets are Rs.6,00,000 current liabilities are Rs.3,00,000 the debtors realized Rs.40,000, the impact on net working capital would be------------------------- a) No change in working ... Decrease of working capital by Rs.80,000 c) Increase of working capital by Rs.40,000 d) None of these

Last Answer : a) No change in working capital

From the information given below, calculate Debt service coverage Ratio– Net profit after interest and Tax Rs. 40,000, Depreciation Rs. 5,000, Rate of Income Tax 50%, 10% Mortgage Debentures Rs. 60,000. Fixed Interest Charges Rs. 6,000, Debenture Redemption Fund Appropriation of Outstanding Debentures 10%. (A) 4•06 times (B) 5•06 times (C) 6•06 times (D) 7•06 times

Description : From the information given below, calculate Debt service coverage Ratio- Net profit after interest and Tax Rs. 40,000, Depreciation Rs. 5,000, Rate of Income Tax 50%, 10% Mortgage Debentures Rs. 60,000. Fixed Interest Charges Rs. 6 ... . (A) 4 06 times (B) 5 06 times (C) 6 06 times (D) 7 06 times

Last Answer : Answer: 4•06 times

The ratio which depicts the relationship between two items,one of which is drawn from the Balance Sheet and the other from the revenue account a) Current ratio b) Equity Ratio c) Net Profit ratio d) Debtors Turn over Ratio

Description : The ratio which depicts the relationship between two items,one of which is drawn from the Balance Sheet and the other from the revenue account a) Current ratio b) Equity Ratio c) Net Profit ratio d) Debtors Turn over Ratio

Last Answer : d) Debtors Turn over Ratio

Which among the following is the societal obligation of accounting ? (A) To ascertain profit correctly (B) To maintain the records of the assets and liabilities of organisation (C) To establish effective organizational control (D) To be helpful in correct tax assessment

Description : Which among the following is the societal obligation of accounting ? (A) To ascertain profit correctly (B) To maintain the records of the assets and liabilities of organisation (C) To establish effective organizational control (D) To be helpful in correct tax assessment

Last Answer : Answer: To be helpful in correct tax assessment

A limited company makes a net profit of Rs. 2,00,000 after writing off preliminary expenses amounting to Rs. 20,000 and providing for depreciation on assets amounting to Rs. 40,000 and gain of Rs. 10,000 on sale of a piece of machinery. What are the funds from operation ? (A) Rs. 2,00,000 (B) Rs. 2,40,000 (C) Rs. 2,50,000 (D) Rs. 2,60,000

Description : A limited company makes a net profit of Rs. 2,00,000 after writing off preliminary expenses amounting to Rs. 20,000 and providing for depreciation on assets amounting to Rs. 40,000 and gain of Rs. 10,000 on sale of a piece of ... 2,00,000 (B) Rs. 2,40,000 (C) Rs. 2,50,000 (D) Rs. 2,60,000

Last Answer : Answer: Rs. 2,50,000

The primary function of an office is– (A) Making, using and preserving records (B) Remunerating personnel (C) Carrying out management policies (D) Safeguarding organization’s assets

Description : The primary function of an office is– (A) Making, using and preserving records (B) Remunerating personnel (C) Carrying out management policies (D) Safeguarding organization’s assets

Last Answer : Answer: Making, using and preserving records

Which of the following is the Accounting equation ? (A) Capital = Assets – Liabilities (B) Capital = Assets + Liabilities (C) Assets = Liabilities – Capital (D) Liabilities = Assets – Capital

Description : Which of the following is the Accounting equation ? (A) Capital = Assets – Liabilities (B) Capital = Assets + Liabilities (C) Assets = Liabilities – Capital (D) Liabilities = Assets – Capital

Last Answer : Answer: Capital = Assets – Liabilities

In common size Balance Sheet analysis we evaluate– (A) Increase or decrease over two years is analysed (B) Only increase over two years is analysed (C) Only decrease over two years is analysed (D) All assets and liabilities are expressed in terms of percentage of total

Description : In common size Balance Sheet analysis we evaluate– (A) Increase or decrease over two years is analysed (B) Only increase over two years is analysed (C) Only decrease over two years is analysed (D) All assets and liabilities are expressed in terms of percentage of total

Last Answer : Answer: All assets and liabilities are expressed in terms of percentage of total

Indian Accounting Standard – 28 is related to– (A) Accounting for taxes on income (B) Financial Reporting of Interests in Joint Venture (C) Impairment of Assets (D) Provisions, Contingent Liabilities and Contingent Assets

Description : Indian Accounting Standard – 28 is related to– (A) Accounting for taxes on income (B) Financial Reporting of Interests in Joint Venture (C) Impairment of Assets (D) Provisions, Contingent Liabilities and Contingent Assets

Last Answer : Answer: Impairment of Assets

Accounting for Intangible Assets are related to– (A) AS - 10 (B) AS - 12 (C) AS - 24 (D) AS - 26

Description : Accounting for Intangible Assets are related to– (A) AS - 10 (B) AS - 12 (C) AS - 24 (D) AS - 26

Last Answer : Answer: AS - 26

Certain characteristics or circumstances may increase the susceptibility of assets to misappropriation. Opportunities to misappropriate assets increase due to the following except: a. Inventory items that are small in size, of high value, or in high demand. b. Known or anticipated future employee layoffs. c. Easily convertible assets, such as bearer bonds, diamonds, or computer chips. d. Fixed assets which are small in size, marketable, or lacking observable identification of ownership.

Description : Certain characteristics or circumstances may increase the susceptibility of assets to misappropriation. Opportunities to misappropriate assets increase due to the following except: a. Inventory items that ... which are small in size, marketable, or lacking observable identification of ownership.

Last Answer : Certain characteristics or circumstances may increase the susceptibility of assets to misappropriation. Opportunities to misappropriate assets increase due to the following except: a. Inventory items that ... which are small in size, marketable, or lacking observable identification of ownership.

Turnover ratios are also known as A. Activity ratios B. Performance ratios C. Both a and b D. None of the above

Description : Turnover ratios are also known as A. Activity ratios B. Performance ratios C. Both a and b D. None of the above

Last Answer : C. Both a and b

Which of the following is most likely to require special planning considerations related to asset valuation? a. Accelerated depreciation methods are used for amortizing the costs of factory equipment. b. The client has recently purchased an expensive copy machine. c. Assets costing less than P5,000 are expensed even when the expected life exceeds one year. d. Inventory is comprised of diamond rings.

Description : Which of the following is most likely to require special planning considerations related to asset valuation? a. Accelerated depreciation methods are used for amortizing the costs of factory equipment. b. ... even when the expected life exceeds one year. d. Inventory is comprised of diamond rings.

Last Answer : Inventory is comprised of diamond rings.

Dividend can be paid generally out of– (A) share premium account (B) capital redemption reserve account (C) current year’s profits (D) All of these

Description : Dividend can be paid generally out of– (A) share premium account (B) capital redemption reserve account (C) current year’s profits (D) All of these

Last Answer : Answer: current year’s profits

Which term is used in the field of Banking? (A) Current Account (B) Plasma (C) Follow on (D) Cold chain

Description : Which term is used in the field of Banking? (A) Current Account (B) Plasma (C) Follow on (D) Cold chain

Last Answer : Answer: Current Account

________ is characteristic of liquidity ratios. (a) Organization’s ability to meet its current debt obligations (b) Organization’s use of debt to finance its assets and whether it’s able to meet the interest payments on the debt ;(c) How efficiently the firm is using its assets ;(d) None of given options

Description : ________ is characteristic of liquidity ratios. (a) Organization's ability to meet its current debt obligations (b) Organization's use of debt to finance its assets and whether it's able to meet the interest ... the debt ;(c) How efficiently the firm is using its assets ;(d) None of given options

Last Answer : (a) Organization’s ability to meet its current debt obligations 

Which of the following is affected by treatment of an accrued item in accounting ? (A) Profit and Loss A/c only (B) Profit and Loss Appropriation A/c (C) Balance Sheet only (D) Profit and Loss A/c and Balance Sheet

Description : Which of the following is affected by treatment of an accrued item in accounting ? (A) Profit and Loss A/c only (B) Profit and Loss Appropriation A/c (C) Balance Sheet only (D) Profit and Loss A/c and Balance Sheet

Last Answer : Answer: Profit and Loss A/c and Balance Sheet

Which of the following is incorrect? a) Good will intangible asset b) Sundry debtors -current asset c) Loose tools tangible fixed asset d) Outstanding expenses -current asset.

Description : Which of the following is incorrect? a) Good will intangible asset b) Sundry debtors -current asset c) Loose tools tangible fixed asset d) Outstanding expenses -current asset.

Last Answer : d) Outstanding expenses -current asset.

If the current ratio is 2, current assests are worth Rs. 1,600, if current ratio is not allowed to fall below 1•5, how much additional can be borrowed by the company on the short term basis ? (A) Rs. 400 (B) Rs. 600 (C) Rs. 2,733 (D) Rs. 800

Description : If the current ratio is 2, current assests are worth Rs. 1,600, if current ratio is not allowed to fall below 1•5, how much additional can be borrowed by the company on the short term basis ? (A) Rs. 400 (B) Rs. 600 (C) Rs. 2,733 (D) Rs. 800

Last Answer : Answer: Rs. 400

The ratio which is a good indicator to maintain the correct selling price and efficiency of trading activity is------ a) Net profit ratio b) Gross profit ratio c) Current ratio d) Liquid ratios

Description : The ratio which is a good indicator to maintain the correct selling price and efficiency of trading activity is------ a) Net profit ratio b) Gross profit ratio c) Current ratio d) Liquid ratios

Last Answer : b) Gross profit ratio