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ratio analysis questions class 12

Capital employed can be calculated from liabilities side approach and assets side approach as follows: Ans.Operating Profit Ratio = 100 – Operating Ratio Ans. = 100- 81.38 =18.62%. For determining the short-term solvency of a business liquidity ratios are essential. 4,000 more than the opening inventory, net purchase Rs. Ans. 4 times b. Explain the meaning of financial statement. Average Payment Period=(Number of Days/ Weeks / Months in a Year)/Creditors Turnover Ratio 12th Accountancy Sample Questions for Practical Exam. Classification of Accounting Ratios. (i)Current investments. Ratio analysis is used to identify various problems with a firm, such as its liquidity, efficiency of operations, and profitability. Working Capital Turnover Ratio=Cost of Revenue from Operations or Revenue from Operations i. e. Net Sales/Working Capital (iv)Sale of goods at a profit (Delhi 2009) Calculate the total current assets and value of inventory. Ratio analysis is a method which includes regrouping of information by utilisation of arithmetical associations, though its interpretation is a complicated concern. Calculate the gross profit ratio. (f)Other current assets (prepaid expenses, interest receivable, etc.) Ans. Ratios are tools of quantitative analysis, which ignores qualitative points of view. Debt to Equity Ratio=Debt (Long-term external equities)/Equity (Shareholders funds) 25.From the following information, calculate any two of the following ratios In view of the requirements of various users, the accounting ratios may be classified as under. (i)Purchase of machinery for cash Stock or Inventory Turnover Ratio=Cost of Revenue from Operations i. e. Cost of Goods Sold/Average Inventory Proprietary Ratio=Proprietors’ Funds or Shareholders’ Funds/Total Assets Total Assets (ii)Working capital, i.e. Alternatively operating cost may be calculated as follows: Debtors/Trade Receivables Turnover Ratio=Credit Revenue from Operations i. e. Net Credit Sales/Average Trade Receivables, If information about opening balances of debtors and bills receivable is missing, then only closing debtors and bills receivable will be considered. Previous Years’Examinations Questions (ii) Liquid ratio/Quick ratio/Acid test ratio This ratio establishes relationship between liquid assets and current liabilities and is used to measure the firm’s ability to pay the claims of creditors immediately. Statement Analysis Tools and Accounting Ratios Class 12 Accountancy Extra Questions. (iii)Proprietary ratio When Assets Approach is Followed It is computed by adding (i) Net profit after interest but before tax Rs 1,40,000, 15% long-term debts Rs 4,00,000,shareholders’ funds Rs 2,40,000 and tax rate 50%. Sales – Gross Profit Total Assets to Debt Ratio=Total Assets/Long-term Debts Statement Analysis Tools and Accounting Ratios Class 12 Accountancy Extra Questions. 12.X Ltd has a current ratio of 3 : 1 and quick ratio of 2 :1. Save my name, email, and website in this browser for the next time I comment. 20,000 to the creditors, both the total of current assets and total of current liabilities will be reduced by the same amount. Items Included in Current Assets These are the Accounting Ratios class 12 Notes prepared by team of expert teachers. Items Included in Total Assets Meaning and definition Ratio analysis is a process of determining and presenting the quantities relationship between two accounting figures to calculate the strength and weaknesses of a business. (b)Trade payables (bills payable and sundry creditors) (Delhi 2008; hots) Choose the correct answer: Question 1. (ii) Purchase of goods on credit Debt equity ratio will improve as the long-term debts will decrease, but total shareholders’ funds remain unchanged. NCERT Solutions for Class 12-commerce Accountancy CBSE, accountancy-company-accounts-and-analysis-of-financial-statements. (i)Current ratio/Working capital ratio This ratio establishes relationship between current assets and current liabilities and is used to assess the short-term financial position of the business concern. (iii) Sale of furniture at cost or (iv)Operating profit ratio Operating profit ratio establishes the relationship between the operating profit and i.e. Reason The shareholders’ funds will reduce by the amount of loss of 3,000, but the long-term debt remain unchanged. (iv)Interest coverage ratio This ratio expresses the relationship between net profit before interest and tax and interest payable on long-term debts. Items Included in Equity or Shareholders’ Funds 7.The current ratio of a company is 3 : 1. If the working capital is Rs 1,80,000. (Delhi 2010; All India 2010) 9,000{/tex}, {tex}= \frac { \text { Debt } } { { Equity } } or \frac { \text { Long-term Debts or Loans } } { \text { Shareholders’ Funds} }{/tex}, {tex}= \frac { 4,00,000 } { 12,00,000 } = 0.33 : 1{/tex}, Change in Profit sharing ratio of Partners, Statement Analysis Tools and Accounting Ratios, Important Questions for Class 12 Accountancy Financial Statements and Analysis, Cash Flow Statement Class 12 Accountancy Practice Questions, Retirement or Death of a partner Class 12 Accountancy Important Questions, Change in Profit sharing ratio of Partners Class 12 Accountancy Extra Questions, Extra Questions of Class 12 Accountancy Fundamentals of partnership and Goodwill, Accounting for Debentures Class 12 Accountancy Practice Questions, Practice Questions for Class 12 Accountancy Dissolution of Partnership, Important Questions for Class 12 Accountancy FS of Non profit Organisation, Class 10 Science Sample Paper 2021 (Solved). (b)Non-current liabilities (i.e. Working Capital = Current Assets – Current Liabilities. (i)Non-current assets, i.e. 2,000, current liabilities Rs. (Any four) (iv) … Repayment of long-term loan will reduce the long-term debt but the shareholders’funds will remain same. Home >> Category >> Finance (MCQ) Questions and answers >> Ratio Analysis; 1) Determine Debtors turnover ratio if, closing debtors is Rs 40,000, Cash sales is 25% of credit sales and excess of closing debtors over opening debtors is Rs 20,000. a. Rajasthan Board RBSE Class 12 Accountancy Chapter 11 Ratio Analysis RBSE Class 12 Accountancy Chapter 11 Textbook Questions RBSE Class 12 Accountancy Chapter 11 Multiple Choice Questions. Cost of Revenue from Operations = Opening Inventory (excluding spare parts and loose tools) + Purchases + Direct Expenses – Closing Inventory (excluding spare parts and loose tools) We have taken care of every single concept given in CBSE Class 12 Accountancy syllabus and questions are framed as per the latest marking scheme and blue print issued by CBSE for class 12. Reason Neither the long-term debt nor the shareholders’ funds are affected by purchasing of machinery for cash. Net Sales x 100 If the excess of current assets over quick assets as represented by inventory is Rs 40,000, calculate current assets and current liabilities. Effect Reduce (b)Company issued 1,00,000 equity shares of Rs 10 each to the vendors of machinery purchased. (i)Liquid ratio (ii)Purchase of goods on credit (iii) Sale of furniture at cost Operating Expenses = Employees Benefits Expenses + Other Expenses (Other than non-operating expenses) + Depreciation and Amortisation Expenses Generally, the ratio of 2 : 1 is considered as an ideal. In case a bill receivable is dishonoured, the current ratio will have no change because it would not affect either, assets or current liabilities. (i)Gross profit ratio (iv)Sale of goods at a profit 1,00,000. Question 1. Ratio will increase as both the current assets and current liabilities will decrease on the payment of dividend. Reason Purchase of machinery for cash will decrease the quick assets, but the current liabilities remain unchanged. (ii)Debt equity ratio 8.Quick ratio of a company is 1.5:1. To calculate the ratio, analysts compare a company’s current assets to its current liabilities. (i)Purchase of fixed assets on a credit of two months Operating Ratio =Cost of Revenue from Operations + Operating Expenses/Revenue from Operations i.e. Assets Approach Ans. Net Credit Purchases = Credit Purchases – Purchase Return. CBSE Class 12 Accountancy Ratio Analysis. 19. Get the free view of chapter 3 Accounting Ratios Class 12 extra questions for Class 12 Accountancy - Analysis of Financial Statements and can use Shaalaa.com to keep it handy for your exam preparation (a)Current investments Reason Shareholders’ funds are increased by the issue of new shares for cash, but the long-term debts remain unchanged. Accounting Ratios It is a mathematical expression that shows the relationship between various items or groups of items shown in financial statements. Effect Reduce Ratios give false result, if they are calculated from incorrect accounting data. Stock turnover ratio will decline because increase in the value of closing stock by ?5,000 will increase the value of average Inventory and decrease the cost of goods sold. Items Included in Long-term Debts It includes long-term borrowings and long-term provisions. 24.From the following information, calculate the following ratios (i) (a) Not change the ratio This ratio is computed as follows: Proprietory ratio= {tex}\frac{Proprietor’s\;Funds\;or\;shareholder’s\;funds}{Total\;assets}{/Tex}, Proprietors funds = Liabilities Approach: Share capital + Reserves and Surplus. (iii)Sale of furniture at cost = Revenue from Operations i.e. 31.From the following calculate: T. S. Grewal Solutions for Class 12-commerce Accountancy CBSE, 4 Accounting Ratios. 1. 350000 (4) Reserve and Surplus: Rs. Accounting Ratios – CBSE Notes for Class 12 Accountancy. it measures how fast the stock is moving through the firm and generating sales. (b)Long-term provisions These are the final accounts prepared at the end of the accounting period and include balance sheet and statement of profit and loss along with notes to accounts. Ans. (i)A business has a current ratio of 3 : 1 and quick ratio of 1.2 : 1. or = 100- 83.64 = 16.36%, 3.What will be the operating profit ratio, if operating ratio is 88.94%? Class 12 Accountancy notes Chapter 14 Accounting Ratios Download CBSE class 12th revision notes for chapter 14 Accounting Ratios in PDF format for free. 1.Liquidity Ratios Liquidity ratios measure the firm’s ability to fulfil its short-term financial obligations. 28.From the following calculate the ‘gross profit ratio’ and ‘working capital turnover ratio’: (ii) Calculate ‘debt equity ratio’ from the following information Total assets Rs 3,50,000, total debt Rs 2,50,000 and current liabilities Rs 80,000. Effect Increase Ans. Information Equity share capital Rs 10,00,000, general reserve Rs 1,00,000, balance of statement of profit and loss after interest and tax Rs 3,00,000, 12% debentures Rs 4,00,000, creditors Rs 3,00,000, land and buildings Rs 13,00,000, furniture Rs 3,00,000, debtors 12,90,000, cash Rs 1,10,000.Revenue from operations i.e. (v)Return on investment/Capital employed It establishes the relationship between net profit before interest, tax and preference dividend and capital employed (equity + debts). Because bills receivable decreases and debtors increase by the same amount. (iv)Short-term loans and advances. The entire NCERT textbook questions have been solved by best teachers for you. Ratios are generally distorted by inflation. 4,00,000. 20,000 to the creditors will increase, decrease or not change the ratio. Return on Investment/Capital Employed=Net Profit before Interest, Tax and Preference Dividend/ Capital Employed x 100 The quick ratio of a company is 1.5 : 1. Therefore, the current ratio will increase. net sales. 14.On basis of the following information, calculate State giving reasons, (for any four) which of the following would improve, reduce or not change the ratio Gross Profit Ratio =Gross Profit/Revenue from Operations i.e. 1.Liquidity Ratios Liquidity ratios measure the firm’s ability to fulfil its short-term financial obligations. These solutions for Accounting Ratios are extremely popular among Class 12 Commerce students for Accountancy Accounting Ratios Solutions come handy for quickly completing your homework and preparing for exams. = Cost of Materials Consumed + Purchases of Stock-in-trade + Changes in Non-current Assets (Tangible assets + Intangible assets + Non-current trade 6.The gross profit ratio of a company is 50%. It indicates the ability of a business firm to meet its long term liabilities. (Delhi 2014) Trade receivables included a debtor Shri Ashok who paid his entire amount due Rs. In case, statement of profit and loss is given, cost of revenue from operations i.e. (iii)Total assets to debt ratio It establishes a relationship between total assets and total long-term debts. The chapter gives detailed information on ratio analysis, the objective of ratio analysis, advantages of ratio analysis, limitations of ratio analysis and types of ratios. 5,00,000, opening inventory Rs. Ans. Ans. State giving reason whether the ratio will improve, decline or not change on payment of dividend by the company. Ans. ii. Current Liabilities are not required to calculate the …….. 4 Marks Questions ■ Current Assets [Current investments + Inventories (including spare parts and loose tools) + Trade Receivables + Cash and Cash Equivalents + Short-term Loans and Advances + Other Current Assets] current assets – current liabilities. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. With effect from 1st April, 2016, they agree to share profits in the ratio of 4:3. or Ans. Ratio analysis is the more popularly and widely used technique of financial statement analysis. (All India 2013) Discuss the importance of current and liquid ratio. Analysis of Accounting Ratios Objective Type Questions. Cost of Goods Sold = Cost of Materials Consumed + Purchases of Stock-in-trade + Change in Inventories of Finished Goods, Work-in-progress and Stock in-trade + Direct Expenses State whether the long-term loan obtained by the company will improve, decrease or not change the ratio. Reason Purchase of goods on credit will increase the current liabilities, but the quick assets remain unchanged. (i)Compute ‘working capital turnover ratio’ from the following information Cash revenue from operations Rs 1,30,000, credit revenue from operations Rs  3,80,000, sales returns Rs  10,000, liquid assets Rs 1,40,000, current liabilities Rs 1,05,000 and inventory Rs 90,000. (All India 2008; hots) (ii)Working capital turnover ratio (iii) Return on investment (i) Purchase of machinery for cash Ratio analysis is a vital part of the analysis of outcomes unveiled by financial statements. (e)Short-term loans and advances { R s .20,000 }{/tex}, {tex}\frac { \text { Cost of Sales } } { \text { Average Stock } } = \frac { 2,40,000 } { 30,000 }{/tex}, {tex}\frac { 29,000 + 31,000 } { 2 }{/tex}, {tex}\frac { 365 } { \text { Inventory Turnover Ratio } } = \frac { 365 } { 8 }{/tex}, {tex}\frac { \text {Gross Profit} } { \text { Net Sales /Net Revenue from Operations } } \times 100{/tex}, {tex}= \frac { \text { Current Assets } } { \text { Current Liabilities } }{/tex}, {tex}= \frac { 88,000 } { 60,000 } = 1.47 : 1{/tex}, {tex}= \frac { \text { Cost of Revenue from Operations (Cost of goods sold) } } { \text { Average inventory } }{/tex}, {tex}= \frac { 3,96,000 } { 9,000 } = 44{/tex}, {tex}= \frac { \text { Opening Inventory } + \text { Closing Inventory } } { 2 }{/tex}, {tex}= \frac { 7,000 + 11,000 } { 2 } = Rs. Items Included in Current Liabilities 34.From the following information, calculate any two of the following ratios 2 times c. 6 times d. 8 times. Redeemed 5% redeemable preference shares Rs. Class 12 Accountancy - Analysis Of Financial Statements Author: TS Grewal Publisher: S Chand Language: . State with reason whether the decrease in rent received by Rs 15,000 will increase, decrease or not change the ratio. State with reason which of the following (revenue from operations) net sales. The higher the ratio, the better it is.Creditors/Payables Turnover Ratio =Net Credit Purchases/Average Payables 33. Current Ratio. Ans. (v)Cash received from debtors There chapter wise Practice Questions with complete solutions are available for download in myCBSEguide website and mobile app. Ans. (ii) Current liabilities of a company are Rs 1,60,000. If the excess of current assets over quick assets as represented by inventory is Rs 1,50,000, calculate current assets and current liabilities. Ans. Also, if credit purchases are not given, then all purchases are deemed to be on credit. 5.What will be the operating profit ratio, if operating ratio is 88.34%? (i)For Current Ratio first there is a need to find the value of current assets than calculated as follows:-Current Ratio. How are they useful? (iii)Other short-term liabilities. Effect Reduce (Delhi 2013) Here,it is assumed that premium payable on redemption of debenture is written-off through existing securities premium. Ans. (a)Short-term borrowings Calculate ‘Gross Profit Ratio’ from the following information: In case a bill receivable is dishonoured, elucidate whether this ratio will improve, decline or will have no change if the current ratio is 2: 1. (b) Not change the ratio 3,20,000; Gross Profit Ratio 25% on sales. (a)Included in the trade payables was a bills payable of Rs 9,000 which was met on maturity. (Delhi 2009) Items Included in Long-term Debts Effect Improve Items excluded in liquid assets are inventories, prepaid expenses. Question 2. After the payment of ? Meaning of Accounting Ratio: i. Items Included in Current Liabilities Current assets are ₹ 50,000 and current liabilities are ₹ 20,000. 3 6. (i) Operating ratio      (ii) Inventory turnover ratio (iii) Proprietary ratio Maximum students of CBSE Class 12 prefer TS Grewal Textbook Solutions to score more in exam. 17.The quick ratio of a company is 2 : 1. Ans. (i) Compute ‘debtors turnover ratio’ from the following information Revenue from operations (Total sales) Rs  5,20,000, cash revenue from operations 60% of the credit revenue from operations closing debtors Rs 80,000, opening debtors are 3/4th of closing debtors. State with reason which of the following transaction would increase, decrease or not change the ratio  Office expenses, administrative expenses, selling and distribution expenses, employees benefit expenses, depreciation and amortisation expenses. Effect No change Reason Cash received from debtors will not change the quick assets because the quick assets are increased and decreased with the same amount, and the current liabilities remain unchanged. Reason Neither the long-term debt nor the shareholders’ funds are affected by purchasing of goods on credit. Operating Ratio =Operating Cost/ Revenue from Operations (Net sales) x 100 10.The debt-equity ratio of a company is 0.8:1. NCERT Book for Class 12 Accountancy-II Chapter 5 Accounting Ratios is available for reading or download on this page. Ans. 2.Solvency Ratios Solvency ratios judge the long-term financial position of an enterprise i.e.whether business is able to pay its long-term liabilities or not. Ans. MP Board Class 12th Accountancy Important Questions Chapter 10 Analysis of Accounting Ratios Analysis of Accounting Ratios Important Questions. (a)Long-term borrowings (All india 2010) (b)Non-current trade investments. (All India 2009) (ii)Purchase of fixed assets on long-term deferred payment basis 26.From the following information, calculate any two of the following ratios (i) Liquid ratio (ii) Debt equity ratio long-term borrowings and long-term provisions). transactions would (a) increase (b) decrease or (c) not change the ratio Long Questions for NCERT Accountancy Solutions Part 2 Class 12 Chapter 5. Accounts Theory : CBSE Class 12th (Ratio Analysis) Q.1. TS Grewal Solutions for Class 12 Accountancy – Change in Profit-Sharing Ratio Among the Existing Partners (Volume I) Question 1. (i) Purchase of fixed assets on a credit of two months 7,000, closing inventory Rs. Examples of most common ratios are Current Ratio, Equity Ratio, Debt to Equity Ratio, Fixed Assets Turnover Ratio, etc. 60,000, 9% debentures Rs. 2,00,000. investments + Long-term loans and advances) + Working Capital – Non-current Liabilities (Long-term borrowings + Long-term provisions) Ans. = 100- 88.94 = 11.06%, 4.What will be the operating profit ratio, if operating ratio is 81.38%? Solution: Calculate quick assets and current assets. Two basic measures of liquidity are : (A) Inventory turnover and Current ratio (B) Current ratio and Quick ratio (…

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