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Chapter Ratio Work Sheet

This document contains 15 multiple choice questions about accounting ratios and financial concepts. The questions cover topics such as the definition of working capital, components of current assets, measures of liquidity, how different transactions impact financial ratios like the current ratio and debt-equity ratio, and calculations related to inventory turnover, gross profit, operating expenses, and operating ratios. The questions are in a worksheet format intended to test understanding of key financial metrics and assessments of business performance and financial health.

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Medini Krishnan
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31 views3 pages

Chapter Ratio Work Sheet

This document contains 15 multiple choice questions about accounting ratios and financial concepts. The questions cover topics such as the definition of working capital, components of current assets, measures of liquidity, how different transactions impact financial ratios like the current ratio and debt-equity ratio, and calculations related to inventory turnover, gross profit, operating expenses, and operating ratios. The questions are in a worksheet format intended to test understanding of key financial metrics and assessments of business performance and financial health.

Uploaded by

Medini Krishnan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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WORK SHEET

Chapter- Accounting Ratios

Q1. Working Capital is the:


(A) Cash and Bank Balance
(B) Capital borrowed from the Banks
(C) Difference between Current Assets and Current Liabilities
(D) Difference between Current Assets and Fixed Assets
Q2. Current assets include only those assets which are expected to be realised
within ………………………
(A) 3 months
(B) 6 months
(C) 1 year
(D) 2 years
Q3. The ………………… of a business firm is measured by its ability to satisfy
its short-term obligations as they become due.
(A) Activity
(B) Liquidity
(C) Debt
(D) Profitability
Q4. Which of the following transactions will improve the Current Ratio :
(A) Cash Collected from Trade Receivables
(B) Purchase of goods for cash
(C) Payment to Trade Payables
(D) Credit purchase of Goods
Q5. A company’s Current Ratio is 2 : 1. After cash payment to some of its
creditors, Current Ratio will:
(A) Decrease
(B) Increase
(C) As before
(D) None of these
Q6. A Company’s Current Assets are ₹8,00,000 and its current liabilities are
₹4,00,000. Subsequently, it purchased goods for ₹1,00,000 on credit. Current
ratio will be
(A) 2 : 1
(B) 2.25 :1
(C) 1.8 : 1
(D) 1.6 : 1
Q7. Assuming that the current ratio is 2 : 1, Cash paid against Bills Payable would:
(A) increase current ratio
(B) Decrease Current ratio
(C) have no effect on Current ratio
(D) decrease gross profit ratio
Q8. Current Assets ₹85,000; Inventory ₹22,000; Prepaid Expenses ₹3,000. Then
liquid assets will be:
(A) ₹63,000
(B) ₹60,000
(C) ₹82,000
(D) ₹1,10,000
Q9. A firm’s current ratio is 3.5: 2. Its current liabilities are Rs. 80,000. Its working
capital will be:
(A) ₹1,20,000
(B) ₹1,60,000
(C) ₹60,000
(D) ₹2,80,000
Q10. Debt equity ratio of a company is 1 : 2. Which of the following
transactions will increase it:
(A) Issue of new shares for cash
(B) Redemption of Debentures
(C) Issue of Debentures for cash
(D) Goods purchased on credit
Q11. Revenue from Operations ₹2,00,000; Inventory Turnover Ratio 5; Gross
Profit 25%. Find out the value of Closing Inventory, if Closing Inventory is
₹8,000 more than the Opening Inventory.
(A) ₹38,000
(B) ₹22,000
(C) ₹34,000
(D) ₹26,000
Q12. Opening Inventory ₹75,000; Closing Inventory ₹1,05,000; Inventory
Turnover Ratio 6; Gross Profit 20% on cost; what will be Gross Profit?
(A) ₹1,35,000
(B) ₹1,08,000
(C) ₹90,000
(D) ₹18,000
Q13. What will be the amount of Gross Profit? If revenue from operations are
₹6,00,000 and Gross Profit Ratio is 20% of cost?
(A) ₹1,50,000
(B) ₹1,00,000
(C) ₹1,20,000
(D) ₹5,00,000
Q14. Total Revenue from Operations ₹15,00,000; Cost of Revenue from Operations
₹9,00,000 and Operating Expenses ₹2,25,000. Calculate operating ratio:
(A) 75%
(B) 25%
(C) 60%
(D) 15%
Q15. In debt equity ratio, debt refers to:
(A) Short Term Debts
(B) Long Term Debts
(C) Total Debts
(D) Debentures and Current Liabilities.
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