: Multiple Choice

State which of Questions (MCQs)

correct:9istaahgvods o i0
1. The the
in the that fananalyse
ol owicalled:wyir)
nprofits
g in
is operations or funds employed
ratios relation to revenue from
II03 sit, (CBSE Term 1,
2021-22)
business areRatios
(a) Profitability (6) Turnover Ratios
(c) Solvency Ratios oo u 25at koees (d) Liquidity Ratiosb
),st) ylo

2. Because of considered
of excusion ofnon-liquid current assets which of the following ratio is
better than current ratio as a measure of liquidity position of the business?
(CBSE Term 1, 2021-22)
(a) Debt -Equity Ratio Lstriog (6) Acid Test Ratio ot
(e).Proprietary Ratio (d) Interest Coverage Ratio
O Which of the following ratio establishes relationship of Shareholders funds' to Net
assets? h o o horg (CBSE Term 1, 2021-22)
(a) Return on Investment (6) Interest Coverage Ratio
(c) Proprietary Ratio (d) Debt-Equity Ratio
4. Which of the following ratio establishes the relationship between Credit revenue from
operations and Trade receivables? (CBSE Term 1, 2021-22)
(a) Inventory Turnover Ratio (b) Interest Coverage Ratio
(c) Trade Payables Turnover Ratio (d) Trade Receivables Turnover Ratio
5. .Current ratioof a company is 3 :1. The value of its current liabilities is T4,00,000. Its
current assets will be: (CBSE Term 1, 2021-22)
(a) 73,00,000 (6) 12,00,000 (c) 2,00,000 (d) 79,00,000
6. During the year ended 31.3.202 1, Soma Ltd. earned net proft after tar t6,00,000. The
company has a long term 10% debt of 50,00,000. The tax rate is 40%. The interest
coverage ratio of the company will be: CBSE Term 1,2021-22)
(a) 2times (6) 3 times (c) 1.2 times (d) 1.5 times
7. Which of the following are included in traditional classification of ratios?
) Liquidity Ratios. (iü) Statement of Profit and loss Ratios.
372 MBD Sure Shot CBSE Question Bank

(üü) Balance Sheet Ratios.

(0) Composite Ratios.
(iv) Profitability Ratios.
(vi) Solvency Ratios.
ACcOuntancyn
(CBSE Sample Paper Term 1,
(a) (iü), (iiü) and (u)
(c) (i), (ii)and (vi)
(6) (), (iv) and (vi)
(a) All (), (i1), (iiü), (iv), (v), (vi) ,2021-2 )
8. The following groups of ratios primarily measure risk:
(CBSE Sample. Paper Term 1,
(a) solvency, activity, and profitability
(c) liquidity, activity, and profitability
(6) liquidity, efficiency, and solvency 2021-22)
(a) liquidity, solvency, and profitability
9. Which one of the following is correct?
() A ratio is an arithmetical relationship of one number to another number.
(i) Liquid ratio is also known as acid test ratio.
(ü) Ideally accepted current ratiois 1: 1.
(iv) Debt equity ratio is the relationship between outsider's funds and
funds. shareholders
In the context of the above two statements, which of the following options is correct?
(CBSE Sample Paper Term 1, 2021-29)
(6) Only (),(ii) and (iv) are correct.
(a) All (¿), (i), (ii) and (iv) are correct.
(c) Only (ü), (üi) and (iv) are correct.(d) Only (iüi) and (iv)are correct.
10. Which ratio indicates the proportion of assets financed out of shareholders' funds?
(CBSE Sample Paper Term 1, 2021-29)
(a) Debt equity ratio (6) Fixed assets turnover ratio
(c) Proprietary ratio (d) Total assets to debt ratio
11. Current ratio of Adaar Ltd. is 2.5: 1.Accountant wants to maintain it at 2:1. Following
options are available. (CBSE Sample Paper Termn 1, 2021-22)
(1) He can repay Bills Payable
(ii) He can purchase goods on credit
(iii) He can take short term loan
Choose the correct option.
(a) Only () is correct (b) Only (iü) is correct
(c) Only (t) and (ii) are çorrect (d) Only (ii) and (iiü) are correct
12. The may indicate that the firm is experiencing stock outs and lost sales.
(CBSE Sample Paper 2020-21)
(a) Average payment period (6) Inventory turnover ratio
(c) Average collection period (d) Quick ratio
it at 2:1
13. Current ratio of Vidur Private Limited is 3:2. Accountant wants to maintain2020-21)
Following options are available. (CBSE Sample. Paper.
(i) He can repay Bills Payable
(iü) He can purchase goods on credit
(iiü) He can take short term loan
Choose the correct option
(a) Only (i) is correct (6) Only (iü) is correct
(c) Only (i) and (iii) are correct (d) Only (ii)and (iü)are correct
 S13

14 Which of the following is not an activity ratio?

(CBSE Delhi2020)
(a) Inventory turnover ratio (6) Interest coverage ratio
(c) Working capital turnover ratio (d) Trade receivables turnover ratio
15. The two basic measures of operational efficiency of a company are
ie) Tnventory Turnover Ratio and Working Capital Turnover Ratio
(b Liquid Ratio and Operating Ratio
(c) Liquid Ratio and Current Ratio
(d) Gross Profit Margin and Net Profit Margin
16. Acid Test ratio comes under: (CBSE SP 2019-20)
(a) Liquidity ratio (6) Solvency ratio (c) Profitability ratio (d) Activity ratio
17. Current assets are those assets which are convertible into cash within:
(a) One month (6) 6mnonths.cssk ir(c) 12 months (d) None of these
18. Which of the following is not considered in the ratio analysis as per guidance notes?
(a) Fixed Assets (6) Share capital
(c) Other Non-current Assets (d)Non-current Assets
19. Which of the following will increase the current ratio where it is 2: 1?
(a) Payment to creditors (6)Conversions of receivables into cash
(c) Purchase of goods on credit (d) Purchase of goods for cash
20. Long term solvency ratio is judged by which of the following ratio?
(a) Debt equity ratio (6) Total assets turnover ratio
(c) Liquidity ratios (d) Operating ratio
21. Which of the following ratios provide solvency position of a business in the long run?
(a) Liquidity Ratios (b) Solvency ratios (c) Profitability ratios(d)Turnover ratios
22. In debt equity ratio, debt refers to
(a) Short termn debts (6) Total debts
(c) Shareholders' funds
(d) Long term borrowings and long term debts
23. Which of the following transactions will increase debt equity ratio which is 1:2?
(a) Issue of shares for cash (6)· Redemption of preference shares
(c) Redemption of debentures J (d) Conversion of debentures into shares
24. Interest coverage is equal to
(a) Interest after interest but before tax/interest on debt
(6) Interest before interest and tax/interest on debt
(e) Interest after interest and debt / interest on debt
(a) Interest on debt / Interest before interest and tax
40, Cost of revenue fronm operations is the difference between
Revenue from operations -Gross ToHt
evenue fTom operations + Gross Proft (b) from operations+ Net Protit
euue rom operations Net:proßt ( Revenue