# Financial and Management Accounting - Financial and Management Accounting MCQ

6:
Identify the item that is not taken into account in computing the current ratio.
 A. Bank overdraft B. Bank C. Stock D. Cash Answer Report Discuss Option: A Explanation : Click on Discuss to view users comments. Jasbir Singh said: (11:41pm on Tuesday 17th November 2015) All the options are considered for computing the current ratio Monika said: (5:11pm on Friday 4th December 2015) Bank overdraft is current liability so it will be consider in current ratio. Jasbir Singh said: (12:26am on Sunday 26th June 2016) Current Ratio=Current Assets/Current liabilitiesC.A=cash in hand cash at bank b/r short term investments debtor stock prepaid expensesC.L=Bank overdraft b/p creditors pro.for taxation proposed dividend unclaimed dividend outstanding exp loans payable within a year Tanzeem Sheikh said: (11:03am on Friday 6th January 2017) Bank OD is current liblitiy so it will consider Santhosh said: (5:24pm on Saturday 13th January 2018) The above answers are right that bank over draft is a current liability it will be considered. Maybe the question is about quick ratio. At that time stock will be the answer. basavaraj pattar said: (7:20am on Friday 19th January 2018) bank od some times fixed libilties when od is more then one year so bank od is the currect option Write your comments here:
7:
Dividing the net profit by the paid up amount of equity share capital yields __ .
 A. Temporary investment B. Earning per share C. Rate of return on equity share capital D. None of the above Answer Report Discuss Option: C Explanation : Click on Discuss to view users comments. Write your comments here:
8:
Price-earning ratio is equal to market price per equity share divided by ___
 A. Earning per share B. Current assets C. Current liabilities D. Liquid assets Answer Report Discuss Option: A Explanation : Click on Discuss to view users comments. Write your comments here:
9:
The sale of inventory on account will cause the quick ratio to
 A. Decrease B. Increase C. Not change D. Become zero Answer Report Discuss Option: B Explanation : Click on Discuss to view users comments. Write your comments here:
10:
Given that fixed assets are at Rs. 600,000 current assets Rs. 400,000 share capital Rs. 500,000, fixed liabilities Rs. 2,50,000, Current liabilities Rs. 2,50,000, the solvency ratio will be
 A. 20% B. 30% C. 40% D. 50% Answer Report Discuss Option: A Explanation : Total assets/total liabilities=solvency ratio which means 1000000/500000=20% Click on Discuss to view users comments. selvi said: (2:34pm on Monday 6th June 2016) total assets/total liabilities=solvency ratiowhich means 1000000/500000=20% DURGA PRASAD MOHAPATRA said: (6:36pm on Thursday 29th June 2017) Solvency ration mean whether Cash flow of the company can be sufficient to meet the liabilities to b paid off(i.e long term tulsi ravada said: (12:19pm on Monday 17th July 2017) Solvency ratio = total liabilities / total assets so 500000/1000000= 50% Surajit Basu said: (7:47pm on Wednesday 18th April 2018) why 1000000/500000x100=20% please describe..and what is the correct ans.Solvency ratio is one of the various ratios used to measure the ability of a company to meet its long term debts. Moreover, the solvency ratio quantifies the size of a company’s after tax income, not counting non-cash depreciation expenses, as contrasted to the total debt obligations of the firm. Also, it provides an assessment of the likelihood of a company to continue congregating its debt obligations.FormulaThe formula used for computing the solvency ratio is:Solvency ratio = (After Tax Net Profit Depreciation) / Total liabilities. Write your comments here:

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