Classical

Financial and Management Accounting - Financial and Management Accounting MCQ

11:  
Return on total assets ratio is equal to _____ divided by total asset
A.

Current liabilities

B.
Net income before preference dividend and interest paid
C.

Current assets

D.

Earning per share

 
 

Option: B

Explanation :

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12:  
Which of the following Iiabilities are taken into account for the quick ratio? 
1. Bills payable
2. Sundry Creditors
3. Loans            
4. Debtors
5. Bank overdraft

 

A.

1, 3 and 5

B.

2,3, and 4

C.

1,3, and 4

D.

2, 4, and 5

 
 

Option: A

Explanation :

Quick ratio is also known as liquid ratio or acid test ratioCurrent ratio provides a rough idea of the liquidity of a firm so subsequently a second testing device was developed named as acid test ratio or quick ratio. It establishes relationship between liquid assets and current liabilities.

Quick ratio = Liquid (quick) assets / Current Liabilities

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VIJYA said: (3:24am on Tuesday 6th September 2016)
quick ratio =Q A/'Q LQ A= S D,Q L =B P, LOANS
Rupinder said: (11:06pm on Sunday 6th November 2016)
Sundry debtors is not liability
CHANCHAL said: (5:19am on Sunday 19th February 2017)
SUNDRY CREDITOR INSTEAD OF SUNDRY DEBTORS

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13:  
If the stock turnover ratio is 4 times and the collection period is 30 days the operating cycle would be
A.

30 days

B.

60 days

C.

90 days

D.

120 days

 
 

Option: C

Explanation :
operating cycle = inventory conversion period + average collection period

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shreya said: (2:15am on Wednesday 13th July 2016)
no.............. its 120 days
DURGA PRASAD MOHAPATRA said: (4:58am on Friday 30th June 2017)
yes 90days i.e 360/4=90days

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14:  
Given that current liabilities are at Rs. 300,000, current ratio is 3:1 and quick ratio is 1:1, the value of stock will be:
A.

Rs. 600,000

B.

Rs. 1,600,000

C.

Rs. 900,000

D.

Rs. 12,00,000

 
 

Option: A

Explanation :

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15:  
If the current ratio stands at 2 : 1 an equal increase in current assets and current liabilities would ------- the current ratio.
A.

Decrease

B.

increase

C.

Not change

D.

Cause fluctuations in

 
 

Option: A

Explanation :

 

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kishor kumar said: (10:23pm on Sunday 26th June 2016)
reatio will be incereased
pooja sharma said: (10:22am on Friday 15th September 2017)
take an example...like if current assets are 400000 and current liabilities are 200000 , then current ratio will be 2:1 and now if we increase current assets and current liablities by 50000...then current assets will be 450000 and current liabilities will be 250000, then the ratio will be 1.8 : 1
Gautam Sanghpriya said: (9:12am on Sunday 1st October 2017)
CURRENT ASSETS = 2000CURRENT LIABILITIES = 1000IF THERE IS AN INCREASE IN BOTH OF RS. 1000 IN BOTH, THEN THE AMOUNT WILL BE C.A. = 2000 1000 = 3000C.L . = 1000 1000 = 2000CURRENT RATIO = C.A./C.L. =3000/2000 = 1.5/1 or 3/2 =3:2so there is a decrease in the ratio.

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