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Accountancy Test - 24
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  • Question 1/10
    5 / -1

    Debt-equity ratio expresses the relationship between short-term debt and equity share capital of an enterprise.

  • Question 2/10
    5 / -1

    A rise in operating ratio will indicate a rise in efficiency.

  • Question 3/10
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    Which ratio indicates the speed with which amount is being paid to the creditors?

  • Question 4/10
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    XYZ Ltd. extends credit terms of 45 days to its customers. Its credit collection would be considered poor if its average collection period was.

  • Question 5/10
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    Which of the following groups of ratios primarily measure risk?

  • Question 6/10
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    What will be the effect of purchase of goods for cash ₹ 3,000 on gross profit ratio?

  • Question 7/10
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    What will be the current ratio of a company whose net working capital is zero?

  • Question 8/10
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    There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given below.

    Assertion (A): The debt to equity ratio will increase at the time of issue of equity shares for cash.

    Reason (R): Issue of equity shares will increase the shareholders’ funds but the long-term debts will remain the same.

  • Question 9/10
    5 / -1

    There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given below.

    Assertion (A): Inventories and prepaid expenses are not considered as quick assets.

    Reason (R): Inventories take some time before it is converted into cash while prepaid expenses can be converted into cash.

  • Question 10/10
    5 / -1

    Directions For Questions

    Read the following case study and answer questions on the basis of the same.

    Tony and Rony started a partnership firm, TR CDs to manufacture music CDs way back in 1990. Now since the music CDs are out of business, they plan to sell the business to one of the major content production houses in Mumbai. For the purpose of selling business, they reached to their accountant to calculate the goodwill and other financial advice. He suggested that since the CDs are very less in demand, their goodwill value will be hampered. Nonetheless, the framework for goodwill calculation was decided as follows

    ‘The goodwill be valued at 4 years’ purchase of super profits.’ The following financial information was obtained at the end of this transaction

    • Assets ₹ 8,000

    • Creditors ₹ 1,000

    • Normal rate of return 10%

    • Goodwill of the firm ₹1,000

    ...view full instructions

    What is the average profit of business?

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