# MCQ of Accounting Ratios | Class 12 | Accountancy | Term-1 | CBSE |

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MCQ of Accounting Ratios, Class 12, Accountancy, Term-1, CBSE

Q1. ………. involves the comparison of a firm’s ratio with that of some selected firms in the same industry or industry average at the same point of time.

1. Time series analysis
2. Cost analysis
3. Cross sectional analysis
4. Data analysis

Q2. …………. involves comparison of a firm’s present ratio with its past ratios.

1. Time series analysis
2. Cost analysis
3. Cross sectional analysis
4. Data analysis

Q3. the objective of ratio analysis is to

1. place an exact value of goodwill
2. Ascertain the payment of cash and cash equivalent
3. Locate the weak spots of business which need more attention
4. Provide summary of personal and real account

Q4. Current assets does not include

1. Short term loan and advance
2. Short term borrowing
3. Current investment

Q5. ……. ratios are calculated on the basis of ‘Cost of revenue from Operation’.

1. Liquidity ratio
2. Solvency ratio
3. Activity ratio
4. Profitability ratio

Q6. Current ratio =

1. Current liability/ Current assets
2. Current assets/ Current liabilities
3. Liquid assets/ Current liabilities
4. Current liabilities/ Liquid aassets

You may also read MCQ of Accounting For Partnership Firm-Fundamentals, MCQ of Change in Profit Sharing Ratio, MCQ of Admission of a Partner, MCQ of Financial Statements of Companies for better score and understanding of Accountancy.

Q7. Quick ratio =

1. Current liabilities/ Current assets
2. Current assets/ Current liabilities
3. Liquid assets/ Current liabilities
4. Current liabilities/ Liquid assets

Q8. Two basic measures of liquidity involve

1. Current ratio and average collection period
2. Gross profit margin and operating ratio
3. Current ratio and liquid ratio
4. Inventory turnover and current ratio

Answer: Current ratio and liquid ratio

Q9. Which of the following is an ideal current ratio?

1. 1:2
2. 2:1
3. 1:1
4. 1:3

Q10. Which of the following is an ideal Quick ratio?

1. 1:2
2. 2:1
3. 1:1
4. 1:3

Q11. Solvency ratio includes

1. Gross profit ratio
2. Interest coverage ratio
3. Net profit ratio
4. Operating ratio

Q12. Profitability ratio is also known as

1. Debt equity ratio
2. Proprietary ratio
3. Income ratio
4. Total assets to debt ratio

Q13. Profitability ratio includes

1. Proprietary ratio
2. Return on investment
3. Interest coverage ratio
4. Debt equity ratio

Q14. Current assets doesn’t include

2. Short term loan
3. Current investment
4. Cash and cash equivalent

Q15. Current liabilities don’t include

1. Short term loan
2. Short term provision
3. Short term borrowing
4. Sundry creditors

Q16. Activity ratios include

1. Proprietary ratio
2. Debt equity ratio
3. Operating ratio
4. Stock turnover ratio

Q17. Turnover ratio is also called as

1. Net profit ratio
2. Activity ratio
3. Income ratio
4. Solvency ratio

Q18. Formula for calculating liquid assets is

1. Inventories – Prepaid expense + current assets
2. Current assets + Inventories – advance tax
3. Current assets  – inventories –  prepaid expenses
4. Prepaid expenses  –  current assets

Answer: Current assets  – inventories –  prepaid expenses

Q19. ………… Ratio is expressed as relationship between long term debts and shareholder’s funds.

1. Total assets to debt ratio
2. Debt equity ratio
3. Current ratio
4. Liquidity ratio

Q20. ……… Ratio is expressed as relationship between total assets and long term debts.

1. Total assets to debt ratio
2. Debt equity ratio
3. Current ratio
4. Liquidity ratio

Answer: Total assets to debt ratio

Q21. Working capital =

1. Current assets / Current liabilities
2. Current assets – Current liabilities
3. Current liabilities / Current assets
4. Current liabilities – Current assets

Answer: Current assets – Current liabilities

Q22. One of the objectives of profitability ratio is

1. to measure the rate of net profit earned on revenue from operation
2. to measure the margin of profit available on revenue from operation
3. to measure how efficiently the capital employed in the business is being used
4. None of the above

Answer: To measure the margin of profit available on revenue from operation

Q23. One of the objectives of Net Profit Ratio is

1. to measure the rate of net profit earned on revenue from operation
2. to measure the margin of profit available on revenue from operation
3. to measure how efficiently the capital employed in the business is being used
4. None of the above

Answer: To measure the rate of net profit earned on revenue from operation

Q24. Return on investment is also known as

1. Capital investment
2. Net return
3. Yield on capital
4. Capital employed

Q25. Ability of the business to pay its long term liabilities is called

Q26. Earning capacity of the business is called

Q27. One of the limitations of accounting ratio is that it ignore ……… factors.

1. Quantitative
2. Qualitative
3. Definitive
4. Gross

Q28. Calculate current ratio

1. 1:2
2. 2:1
3. 1:3
4. 2:3

Q29. Current Ratio is 3:5:1

Working Capital : Rs. 90,000

Calculate the amount of Current Assets and Current Liabilities.

1. Current liabilities 36000 and current assets 126000
2. Current liabilities 25 000 and current assets 120000
3. Current liabilities 30000 and current assets 125000
4. Current liabilities 34000 and current assets 124000

Answer: Current liabilities 36000 and current assets 126000

Q30. Handa Ltd. had inventory of Rs. 20,000. Total Liquid assets are Rs. 1,00,000 and quick ratio is 2:1. Calculate the current ratio.

1. 1 : 2.4
2. 2 : 1
3. 2.4 : 1
4. 1:3

Q31. Calculate Inventory Turnover Ratio if :

Inventory in the beginning is Rs. 76,250

Inventory at the end is Rs. 98,500

Gross Revenue from operations is Rs. 5,20,000

Return Inwards is Rs. 20,000.

Purchase is Rs. 3,22,250

1. 2 times
2. 3.43 times
3. 4.5 times
4. 5 times

Q32.

1. Quick ratio 0.54 : 1 ; inventory turnover ratio 3.74 times ; return on investment 41.17 %
2. Quick ratio 0.2 : 1 ; inventory turnover ratio 2 times ; return on investment 51.3 %
3. Quick ratio 0.35 : 1 ; inventory turnover ratio 3.12 times ; return on investment 36.3 %
4. Quick ratio 1:2 ; inventory turnover ratio 2.54 times ; return on investment 39.2 %

Answer: Quick ratio 0.54 : 1 ; inventory turnover ratio 3.74 times ; return on investment 41.17 %

Q33. Calculate ‘Debt-Equity Ratio’ from the following information.

Total Assets : Rs. 3,50,000

Total Debt : Rs. 2,50,000

Current Liabilities : Rs. 80,000

1. 1:2
2. 1.7 : 1
3. 2.1 : 1
4. 3:1

Q34. Calculate interest coverage ratio from the following information.

Net profit (After Taxes) = Rs. 1,00,000

Fixed Interest charges on long term borrowing = Rs. 20,000

Rate of Income Tax : 50%

1. 9 times
2. 10 times
3. 11 times
4. 13 times

Q35. Cost of revenue from operations is Rs. 5,00,000. The opening stock is Rs. 40,000 and the closing stock is Rs. 60,000 (at cost). Calculate inventory turnover ratio.

1. 9 times
2. 10 times
3. 11 times
4. 13 times

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