NCERT Class 12 Accountancy MCQ Chapter 9 Accounting Ratios Solutions, AHSEC Class 12 Accountancy Multiple Choice Question Answer to each chapter is provided in the list so that you can easily browse throughout different chapters NCERT Class 12 Accountancy MCQ Chapter 9 Accounting Ratios Question Answer and select needs one.
NCERT Class 12 Accountancy MCQ Chapter 9 Accounting Ratios
Also, you can read the SCERT book online in these sections NCERT Class 12 Accountancy Multiple Choice Solutions by Expert Teachers as per SCERT (CBSE) Book guidelines. AHSEC Class 12 Accountancy MCQ Solutions. These solutions are part of SCERT All Subject Solutions. Here we have given HS 2nd Year Accountancy Objective Type Question Answer for All Subjects, You can practice these here.
Accounting Ratios
Chapter: 9
| PART – ⅠⅠ |
MULTIPLE CHOICE QUESTION ANSWER
1. What is the primary purpose of accounting ratios?
(i) To calculate the company’s tax liability.
(ii) To assess the financial health of a business.
(iii) To determine the number of employees in the company.
(iv) To record the sales revenue.
Ans: (ii) To assess the financial health of a business.
2. Which of the following is an example of a solvency ratio?
(i) Return on Assets.
(ii) Quick Ratio.
(iii) Debt to Equity Ratio.
(iv) Price to Earnings Ratio.
Ans: (iii) Debt to Equity Ratio.
3. If the current assets of a company are ₹5,00,000 and current liabilities are ₹2,50,000, what is the current ratio?
(i) 1:1
(ii) 2:1
(iii) 0.5:1
(iv) 3:1
Ans: (ii) 2:1
4. Which of the following is NOT an example of a liquidity ratio?
(i) Current Ratio.
(ii) Quick Ratio.
(iii) Return on Assets.
(iv) Cash Ratio.
Ans: (iii) Return on Assets.
5. What does ratio analysis help an analyst understand about a business?
(i) Profitability and solvency only.
(ii) Liquidity and solvency only.
(iii) Profitability, liquidity, solvency, and efficiency.
(iv) Efficiency only.
Ans: (iii) Profitability, liquidity, solvency, and efficiency.
6. The current ratio can be numerically expressed in the form of the following equation:
(i) Current ratio = Current assets – current liabilities.
(ii) Current ratio = Current assets + current liabilities.
(iii) Current ratio = Current assets / current liabilities.
(iv) Current ratio = Current assets х current liabilities.
Ans: (iii) Current ratio = Current assets / current liabilities.
7. A company’s cost of goods sold (COGS) is ₹8,00,000, and the average inventory is ₹2,00,000. What is the inventory turnover ratio?
(i) 2 times.
(ii) 3 times.
(iii) 4 times.
(iv) 5 times.
Ans: (iii) 4 times.
8. What does SWOT in ratio analysis stand for?
(i) Strategy-Work-Opportunity-Task.
(ii) Strength-Weakness-Opportunity-Threat.
(iii) Solvency-Weakness-Optimization-Tactics.
(iv) Standards-Worth-Output-Time.
Ans: (ii) Strength-Weakness-Opportunity-Threat.
9. If a company’s net profit is ₹1,50,000 and its total revenue from operations is ₹7,50,000, what is the net profit margin?
(i) 20%
(ii) 15%
(iii) 30%
(iv) 25%
Ans: (i) 20%
10. A firm’s total liabilities are ₹4,00,000, and its total equity is ₹6,00,000. What is the debt-to-equity ratio?
(i) 0.5:1
(ii) 1:1
(iii) 2:1
(iv) 0.67:1
Ans: (iv) 0.67:1
11. Which type of comparison is used to assess a firm’s performance over time?
(i) Inter-firm comparison.
(ii) Cross-sectional analysis.
(iii) Intra-firm comparison.
(iv) SWOT analysis.
Ans: (iii) Intra-firm comparison.
12. What aspect does ratio analysis fail to consider due to its focus on monetary aspects?
(i) Price-level changes.
(ii) Quantitative factors.
(iii) Qualitative or non-monetary aspects.
(iv) Variations in accounting practices.
Ans: (iii) Qualitative or non-monetary aspects.
13. The two basic measures of liquidity are:
(i) Inventory turnover and current ratio.
(ii) Current ratio and liquid ratio.
(iii) Gross profit margin and operating ratio.
(iv) Current ratio and average collection period.
Ans: (ii) Current ratio and liquid ratio.
14. In which economic condition does ratio analysis become less meaningful due to the stable money measurement principle?
(i) Recession.
(ii) Deflation.
(iii) Inflation.
(iv) Depression.
Ans: (iii) Inflation.
15. A firm’s net sales are ₹9,00,000, and its average total assets are ₹4,50,000. What is the asset turnover ratio?
(i) 1 time.
(ii) 1.5 times.
(iii) 2 times.
(iv) 2.5 times.
Ans: (iii) 2 times.
