Accounting Ratios Class 12 Accountancy MCQ set B PDF

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Accounting For Share Capital Class 12 Accountancy MCQ...

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Accounting Ratios Class 12 Accountancy MCQ Class 12 Accountancy students should refer to the following multiple-choice questions with answers for Accounting Ratios in standard 12. These MCQ questions with answers for Grade 12 Accountancy will come in exams and help you to score good marks

Accounting Ratios MCQ Questions Class 12 Accountancy with Answers Question: Proprietary or equity ratio is equal to    

a) Shareholders funds/ total assets b) Shareholders funds+ total assets c) Shareholders funds- total assets d) None of the options

Answer: Shareholders funds/ total assets

Question: Fixed assets to proprietors fund ratio establish a relationship between    

a) Fixed assets and shareholders funds b) Working Capita and shareholders funds c) Return on Working Capital d) None of the options

Answer: Fixed assets and shareholders funds

Question: Fixed Assets to Proprietors Fund Ratio is equal to    

a) Fixed Assets/Proprietors fund b) Fixed Assets+Proprietors fund c) Fixed Assets-Proprietors fund d) None of the options

Answer: Fixed Assets/Proprietors fund

Question: Interest Coverage Ratio is equal to    

a) Net Profit before Interest and tax/Interest on long term loan b) Net Profit before Interest and tax+Interest on long term loan c) Net Profit before Interest and tax-Interest on long term loan d) None of the options

Answer: Net Profit before Interest and tax/Interest on long term loan

Question: Interest Coverage Ratio is deal only in    

a) Return on loan as interest b) Return on Working Capital c) Return on loan as interest and Return on Working Capital d) None of the options

Answer: Return on loan as interest

Question: Management are interested in    

a) Activity Ratios and Profitability Ratios b) Activity Ratios c) Profitability Ratios d) None of the options

Answer: Activity Ratios and Profitability Ratios

Question: Equity Investors are interested in    

a) All of the options b) knowing Earnings per Share c) Return on Investment d) Return on Equity

Answer: All of the options

Question: Long term creditors are those creditors who provide funds for    

a) More than one year b) Only one year c) More than one year and Only one year d) None of the options

Answer: More than one year

Question: Long term creditors are interested in    

a) All of the options b) Debt-Equity Ratio c) Proprietary Ratio d) Proprietary Ratio

Answer: All of the options

Question: Short-term creditors are interested in    

a) Current Ratio and Quick Ratios b) Current Ratio c) Quick Ratios d) None of the options

Answer: Current Ratio and Quick Ratios

Question: Inventory ratio is a relationship between    

a) Cost of good sold and cost of average inventory b) Cost of good Purchased and cost of average inventory c) Cost of good sold and cost of average inventory and Cost of good Purchased and cost of average inventory d) None of the options

Answer: Cost of good sold and cost of average inventory

Question: Opening Stock + Purchase + Direct Expense - Closing stock is equal to    

a) Cost of goods sold b) Cost of goods purchased c) Cost of goods sold and Cost of goods purchased d) None of the options

Answer: Cost of goods sold

Question: Average Inventory is equal to    

a) Opening stock + Closing stock/2 b) Opening stock - Closing stock/2 c) Opening stock + Closing stock/2 and Opening stock - Closing stock/2 d) None of the options

Answer: Opening stock + Closing stock/2

Question: Working capital turnover ratio indicates the velocity of the utilization of    

a) Net working capital b) Accounts receivable turnover ratio c) Net working capital and Accounts receivable turnover ratio d) None of the options

Answer: Net working capital

Question: Working capital turnover ratio is equal to    

a) Cost of Sales/Working Capital b) Cost of Sales + Working Capital c) Cost of Sales - Working Capital d) None of the options

Answer: Cost of Sales/Working Capital

Question: Inventory turnover ratio be more important when analysing    

a) Grocery store b) Insurance company c) Grocery store and Insurance company d) None of the options

Answer: Grocery store

Question: For measuring the long term solvency of any business we calculate    

a) Debt Equity Ratio b) Working Capital Ratio c) Debt Equity Ratio and Working Capital Ratio d) None of the options

Answer: Debt Equity Ratio

Question: Debt Equity Ratio is also known as    

a) External internal equity ratio b) Working Capital Ratio c) External internal equity ratio and Working Capital Ratio d) None of the options

Answer: External internal equity ratio

Question: Debt equity ratio indicates the relationship between    

a) External equities and the internal equities b) Cost of goods sold and Working capital c) External equities and the internal equities and Cost of goods sold and Working capital d) None of the options

Answer: External equities and the internal equities

Question: Equity ratio relates to    

a) Shareholders funds to total assets b) Shareholders funds to total Liabilities c) Shareholders funds to total assets and Shareholders funds to total Liabilities d) None of the options

Answer: Shareholders funds to total assets

Question: Sales ratio may otherwise be called    

a) Turnover b) Working Capital c) Turnover and Working Capital d) None of the options

Answer: Turnover

Question: Debtors Rs. 5000, B/R Rs. 1000, Credit Sales for the year Rs. 24000, Cash Sales Rs. 6000, Hence average Collection Period in months    

a) 3 Months b) 4 Months c) 7.5 Months d) None of the options

Answer: 3 Months

Question: No. of Equity Shares 5000, Dividend per equity share Rs. 4, Earning per Equity Share Rs. 10, Hence Pay-out ratio is    

a) 0.4 b) 0.2 c) 0.3 d) None of the options

Answer: 0.4

Question: Current Ratio is 3:4, Current Liabilities Rs. 24000, the amount of current assets will be    

a) Rs 18000 b) Rs 15000 c) Rs 16000 d) Rs 20000

Answer: Rs 18000

Question: Opening Stock Rs. 80000, Closing Stock Rs. 100000, Cost of Goods Sold Rs. 3,60000, Hence stock turnover is    

a) 4 Times b) 5 Times c) 2 Times d) None of the options

Answer: 4 Times

Question: Average payment period 2 months hence creditors turnover will be    

a) 6 Times b) 5 Times c) 2 Times d) None of the options

Answer: 6 Times

Question: If the operating ratio is 75%, the Net Profit ratio will be    

a) 0.25 b) 0.15 c) 0.2 d) 0.3

Answer: 0.25

Question: The most rigorous test of liquidity is    

a) Absolute Liquid ratio b) Quick Ratio c) Current Ratio d) None of the options

Answer: Absolute Liquid ratio

Question: Acid test ratio is equal to quick assets divided by    

a) Current Liabilities b) Long-Term Liabilities c) Creditors Only d) None of the options

Answer: Current Liabilities

Question: Return on Investment is ratio between    

a) Net Profit and capital employed b) Investment and profit c) Net Profit and capital employed and Investment and profit d) None of the options

Answer: Net Profit and capital employed

Question: Capital Employed is equal to    

a) Fixed Capital+Working Capital b) Total Assets-Total Liabilities c) Total Assets d) Total Liabilities

Answer: Fixed Capital+Working Capital

Question: Ratios which are usually calculated in times are    

a) Activity Ratio b) Profitability Ratio c) Financial Position Ratio d) None of the options

Answer: Activity Ratio

Question: Which ratios are commonly expressed in percentage    

a) Profitability Ratio b) Activity Ratio c) Financial Position Ratio d) None of the options

Answer: Profitability Ratio

Question: Activity ratios help management in    

a) Evaluating the performance b) Managing the resource c) Planning the finance d) None of the options

Answer: Evaluating the performance

Question: A low current ratio may signify    

a) Shortage of working capital b) Working capital adequacy c) Optimum working capital d) None of the options

Answer: Shortage of working capital

Question: Collection from book debts    

a) Have no effect on current ratio b) Decrease the current ratio c) Increase the current ratio d) None of the options

Answer: Have no effect on current ratio

Question: A low proprietary ratio indicates    

a) Over trading b) Under trading c) Over trading and Under trading d) None of the options

Answer: Over trading

Question: A low Stock turnover indicates    

a) Over investment in stock b) Monopoly situation c) Solvency Position d) None of the options

Answer: Over investment in stock

Question: Current ratio is sometimes referred as to    

a) Working Capital Ratio b) Solvency Ratio c) Financial Ratio d) None of the options

Answer: Working Capital Ratio

Question: Price Earning ratio is useful to    

a) Investors in shares b) Short term Creditors c) Debentures holders d) None of the options

Answer: Investors in shares

Question: Liquid Assets include : a) Debtors b) Bills Receivable c) Bank Balance d) All of the Above Answers: D

Question: Liquid Ratio is equal to liquid assets divided by : a) Non-Current Liabilities b) Current Liabilities c) Total Liabilities d) Contingent Liabilities Answers: B

Question: Patents and Copyrights fall under the category of:

a) Current Assets b) Liquid Assets c) Intangible Assets d) None of Above Answers: C

Question: On the basis of following data, the liquid ratio of a company will be : Current Ratio 5 : 3; Current Liabilities Rs.75,000 and Inventory Rs.25,000 a) 1 : 1 b) 2 : 1.8 c) 3 : 2 d) 4 : 3 Answers: D

Question: Current ratio of a firm is 9 : 4. Its current liabilities are Rs. 1,20,000. Inventory is Rs.30,000. Its liquid ratio will be : a) 1 : 1 b) 1.5 : 1 c) 2 : 1 d) 1.6:1 Answers: C

Question: A firm’s current ratio is 3.5 : 2. Its current liabilities are Rs.80,000. Its working capital will be :

a) Rs. 1,20,000 b) Rs. 1,60,000 c) Rs.60,000 d) Rs.2,80,000 Answers: C

Question: Average Inventory Rs.60,000; Inventory Turnover Ratio 8; Gross Profit 20% on revenue from operations; what will be Gross Profit? a) Rs.1,20,000 b) Rs.96,000 c) Rs.80,000 d) Rs.15,000 Answers: A

Question: Opening Inventory Rs.75,000; Closing Inventory Rs.1,05,000; Inventory Turnover Ratio 6; Gross Profit 20% on cost; what will be Gross Profit? a) Rs.1,35,000 b) Rs.1,08,000 c) Rs.90,000 d) Rs.18,000 Answers: B

Question: Opening Inventory Rs.40,000; Purchase Rs.4,00,000; Purchase Return Rs.12,000, what will be Inventory turnover ratio if Closing Inventory is less than Opening Inventory by Rs.8,000? a) 9 Times b) 10.78 Times c) 11 Times d) 8.82 Times Answers: C

Question: Working Capital is 7,20,000; Trade Payables 40,000; Other Current Liabilities 2,00,000; Calculate Current Ratio. a) 3 : 1 b) 4 : 1 c) 5 :1 d) 7:1 Answers: B

Question: Current Assets are 4,00,000; Inventories 2,00,000; Working Capital 2,40,000, calculate Current Ratio. a) 2.5:1 b) 1:1 c) 2:1 d) 1:2 Answers: A

Question: Which ratio is not a part of Solvency Ratio? a) Current Ratio b) Debt to Equity Ratio c) Total Assets to Debt Ratio d) Proprietary Ratio Answers: A

Question: A transaction involving an increase in Current Ratio but no change in Working Capital: a) Purchase of goods on credit b) Cash payment of Non-current Liability c) Payment to a Trade Creditor d) Sale of Fixed Assets for Cash Answers: C

Question: In debt equity ratio, debt refers to : a) Short Term Debts b) Long Term Debts c) Total Debts d) Debentures and Current Liabilities Answers: B

Question: Proprietary Ratio indicates the relationship between Proprietor’s Funds and a) Long-Term Debts b) Short Term & Long Term Debts c) Total Assets d) Debentures Answers: C

Question: The formula for calculating the Debt Equity Ratio is : a) Short Term Debts/Shareholder’s Funds b) Shareholder’s Funds/Fixed Assets c) Short Term + Long Term Debts/Shareholder’s Funds d) None of the Above Answers: D

Question: A Company’s Current Assets are Rs.6,00,000 and working capital is Rs.2,00,000. Its Current Ratio will be : a) 3 : 1 b) 1.5 : 1 c) 2 : 1 d) 4 : 1 Answers: B

Question: A Company’s Current Ratio is 2.4 : 1 and Working Capital is Rs.5,60,000. If its Liquid Ratio is 1.5, what will be the value of Inventory? a) Rs.6,00,000 b) Rs.2,00,000 c) Rs.3,60,000 d) Rs.6,40,000 Answers: C

Question: A Company’s Current Ratio is 2.5 : 1 and its Working Capital is Rs.60,000. If its Inventory is Rs. 52,000, what will be the liquid Ratio? a) 2.3 : 1 b) 2.8 : 1 c) 1.3 : 1 d) 1.2 : 1 Answers: D

Question: A Company’s liquid assets are Rs. 10,00,000 and its current liabilities are Rs.8,00,000. Subsequently, it purchased goods for Rs. 1,00,000 on credit. Quick ratio will be ________ a) 1.11:1 b) 1.22:1 c) 1.38 : 1 d) 1.25 : 1 Answers: A

Question: A Company’s liquid assets are Rs.5,00,000 and its current liabilities are Rs.3,00,000. Thereafter, it paid 1,00,000 to its trade payables. Quick ratio will be: a) 1.33 : 1 b) 2.5 : 1 c) 1.67:1 d) 2 : 1 Answers: D

Question: The ________ is a measure of liquidity which excludes _______ generally the least liquid asset. a) Current ratio, Accounts receivable b) Liquid ratio, Accounts receivable c) Current ratio, inventory d) Liquid ratio, inventory Answers: D

Question: 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 Answers: C

Question: 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 Answers: B

Question: Ideal Quick Ratio is : a) 1 :1 b) 1 : 2 c) 1 : 3 d) 2 : 1 Answers: A

Question: Liquid Assets : a) Current Assets - Prepaid Exp. b) Current Assets - Inventory + Prepaid Exp. c) Current Assets - Inventory - Prepaid Exp. d) Current Assets + Inventory - Prepaid Exp. Answers: C

Question: Buying goods for cash    

a) Have no effect on current ratio b) Decrease the current ratio c) Increase the current ratio d) None of the options

Answer: Have no effect on current ratio

Question: Ratio of Net Sales to Net Working Capital is    

a) Working Capital Turnover Ratio b) Profitability Ratio c) Liquidity Ratio d) None of the options

Answer: Working Capital Turnover Ratio

Question: Ratio of Net Profit before interest and tax to sales is    

a) Operating Profit Ratio b) Capital Gearing c) Solvency Ratio d) None of the options

Answer: Operating Profit Ratio

Question: Debt Equity Ratio is    

a) Solvency Ratio b) Liquidity Ratio c) Profitability Ratio d) None of the options

Answer: Solvency Ratio

Question: Stock turnover ratio is calculated by dividing cost of goods sold by    

a) Average Stock b) Closing Stock c) Opening Stock d) None of the options

Answer: Average Stock

Question: Quick ratio does not include    

a) Stock b) Bank Balance c) Cash d) Debtors

Answer: Stock

Question: Liquid assets means current assets less    

a) Stock and prepaid expenses b) Stock c) prepaid expenses d) None of the options

Answer: Stock and prepaid expenses

Question: Sales ratio may otherwise be called    

a) Turnover b) Working Capital c) Turnover and Working Capital d) None of the options

Answer: Turnover

Question: An equal increase in both current assets and liabilities would________Current ratio    

a) Increase b) Decrease c) No effect d) None of the options

Answer: Increase

Question: The excess of Current ratio is also treated as a sign of managerial    

a) Inefficiency b) Efficiency c) Inefficiency and Efficiency d) None of the options

Answer: Inefficiency

Question: Issue of Debentures would________Debt Equity Ratio    

a) Increase b) Decrease c) No effect d) None of the options

Answer: Increase

Question: Conversion of debentures into preference shares shall_________The debt ratio    

a) Decrease b) Increase c) No effect d) None of the options

Answer: Decrease

Question: The main purpose of activities ratios is________    

a) To know how effectively the resources have been used b) To know the solvency c) To meet short term liabilities d) None of the options

Answer: To know how effectively the resources have been used

Question: Followings are the solvency ratio except    

a) Quick Ratio b) Total Assets to Debt Ratio c) Debt equity ratio d) Proprietary Ratio

Answer: Quick Ratio

Question: Which of the following is a liquidity ratio?    

a) Quick ratio b) Inventory turnover c) Working Capital Turnover Ratio d) None of the options

Answer: Quick ratio

Question: Which Ratio shows the relationship between current assets with current liabilities    

a) Current ratio b) Debt ratio c) Quick ratio d) Gross profit ratio

Answer: Current ratio

Question: Low Current Ratio indicates    

a) Business cannot meet short term liability b) Business can meet long term liability c) Business cannot meet long term liability d) Business can meet short term liability

Answer: Business cannot meet short term liability

Question: Cost of Revenue from operations + Operating Expenses/ Revenue from operations x100    

a) Operating Ratio b) Proprietary Ratio c) Gross Profit Ratio d) Working Capital Turnover Ratio

Answer: Operating Ratio

Question: Inventory Turnover Ratio is calculated under__________    

a) Activity Ratio b) Solvency Ratio c) Profitability Ratio d) None of the options

Answer: Activity Ratio

Question: Ratio which convey an enterprise s ability to meet long term obligations   

a) Solvency ratio b) Activity ratio c) Liquidity ratio



d) Profitability ratio

Answer: Solvency ratio

Question: Which Ratio establishes the relationship between net profit and revenue from operations.    

a) Net profit ratio b) Gross Profit Ratio c) Working Capital Turnover Ratio d) None of the options

Answer: Net profit ratio

Question: Liquidity r...