# Practical MCQs of Accounting Ratios (Accountancy class 12)

Looking for practical MCQs with answers of Accounting Ratios chapter of Accountancy class 12 CBSE, ISC and other state Board.

We have compiled very important MCQs of the practical portion of the Accounting Ratios chapter of class 12

## practical Multiple Choice Questions of Accounting Ratios with answers of Accountancy class 12

Let’s Practice

**The current Ratio is 2 : 1. On the sale of a fixed asset (Book value ₹ 40,000) for ₹36,000 on credit, state whether the current Ratio will**

a) improve

b) Decline

c) Not change

d) Can’t say

Ans – a)

**If opening inventory is ₹ 1,20,000, Cost of Revenue from Operations is ₹ 10,00,000 and Inventory Turnover Ratio is 5 Times. then Closing Inventory will be**

a) ₹ 3,20,000

b) ₹ 2,80,000

c) ₹ 1,60,000

d) ₹ 4,00,000

Ans – b)

**If current Ratio of a firm is 2.5:1 and its current liabilities are ₹ 4,00,000. Its working capital will be**

a) ₹ 6,00,000

b) ₹ 7,50,000

c) ₹ 8,00,000

d) ₹ 14,00,000

Ans – a)

**Non-current assets of a firm are ₹ 26,00,000, Current Assets are ₹ 9,00,000 and Shareholder’s Funds are ₹ 21,50,000. Total debts of the firm will be**.

a) ₹ 43,50,000

b) ₹ 13,50,000

c) ₹ 21,50,000

d) ₹ 38,50,000

Ans – b)

**Working Capital is ₹ 7,20,000; Trade Payables ₹ 40,000; Other current Liabilities ₹ 2,00,000; Calculate Current Ratio.**

a) 2 : 1

b) 4 : 1

c) 5 : 1

d) 7 : 1

Ans – b)

**Current Assets are ₹ 10,00,000; Inventories ₹ 5,00,000; Working Capital ₹ 6,00,000. Calculate Current Ratio**.

a) 2.5 : 1

b) 1 : 1

c) 2 : 1

d) 1 : 2

Ans – a)

If Total Assets are ₹ 1,25,000, Total Debts, i.e., external debts are ₹ 1,00,000 and current liabilities are ₹ 50,000. Debt

Equity Ratio will be

a) 1 : 1

b) 1 : 2

c) 2 : 1

d) None of these

Ans – c)

If Credit Revenue from Operations is ₹ 7,00,000, Cash Revenue from Operations is ₹ 1,00,000. Cost of Revenue from Operations

is ₹ 6,40,000, then Gross Profit Ratio will be

a) 15%

b) 18%

c) 25%

d) 20%

Ans – d)

If Revenue from Operations is ₹ 1,60,000 and Gross Profit is ₹ 40,000, Gross Profit Ratio will be

a) 30%

b) 25%

c) 40%

d) 50%

Ans – b)

Revenue from Operations ₹ 9,00,000, Gross Profit 25% on Cost, Operating Expenses ₹ 90,000, Operating Ratio will be

a) 100%

b) 50%

c) 90%

d) 10%

Ans – c)

From the following information, calculate Proprietary Ratio: Share Capital ₹ 5,00,000, Non-Current Assets ₹ 22,00,000,

Reserves and Surplus ₹ 3,00,000, Current Assets ₹ 10,00,000.

a) 100%

b) 70%

c) 40%

d) 25%

Ans – d)

Given that:

Opening Inventory – ₹ 1,20,000

Purchases – ₹ 9,00,000

Return Outward – ₹ 40,000

and the closing inventory is ₹ 20,000 less than opening inventory, then, Inventory Turnover Ratio is:

a) 5 Times

b) 7 Times

c) 8 Times

d) 10 Times

Ans – c)

If LR Ltd has Total Debts of ₹ 3,70,000, Long Term Debts of ₹ 2,00,000 and working capital of ₹ 1,80,000 then its current Ratio

will be ** _** .

a) 2.6 : 1

b) 3.2 : 1

c) 2.06 : 1

d) 1.03 : 1

Ans – c)

A firm’s current ratio is 1.75 : 1. If current liabilities are ₹ 80,000, then its working capital will be:

a) ₹ 1,20,000

b) ₹ 1,60,000

c) ₹ 60,000

d) ₹ 2,80,000

Ans – c)

A firm’s working capital is ₹ 90,000. Its current ratio is 3.5 : 2. Its current assets will be:

a) ₹ 1,35,000

b) ₹ 3,15,000

c) ₹ 2,10,000

d) ₹ 1,80,000

Ans – c)

A firm’s current assets are ₹ 3,60,000, current ratio is 3 : 1. Cost of revenue from operations is ₹ 12,00,000. Its working

capital turnover ratio will be:

a) 3 times

b) 5 times

c) 8 times

d) 4 times

Ans – b)

Given that:

Current Ratio 2.5

Quick Ratio 1.5

Working Capital ₹60,000

The value of current liabilities will be:

a) ₹ 15,000

b) ₹ 40,000

c) ₹ 60,000

d) ₹ 1,00,000

Ans – b)

If Share Capital ₹ 4,00,000, Reserves and Surplus ₹ 1,50,000, Non-current Assets ₹ 18,00,000, Current Assets ₹ 4,00,000,

then proprietary ratio will be:

a) 12%

b) 25%

c) 8.33%

d) None of the above

Ans – b)

A company extends credit terms of 45 days it its customers, its credit collection would be considered poor if its average

collection period was:

a) 30 days

b) 52 days

c) 41 days

d) 36 days

Ans – b)

Cost of Revenue from operations ₹ 15,00,000, Current Assets ₹ 4,00,000, Current Liabilities ₹ 1,50,000. Find its Working

Capital Turnover Ratio.

a) 3.75 times

b) 5 times

c) 6 times

d) 10 times

Ans – c)

If selling price is fixed 25% above the cost, the Gross Profit Ratio is:

a) 13%

b) 28%

c) 26%

d) 20%

Ans – d)

Net Revenue from Operation ₹ 4,00,000, Average inventory ₹ 50,000, Gross Loss on sales 25%. Find Inventory Turnover Ratio:

a) 8 times

b) 10 times

c) 2 times

d) None of these

Ans – b)

A Company’s Current Ratio is 3 : 1; Current Liabilities are ₹ 2,00,000; Inventories are ₹ 1,50,000 and Prepaid Expenses are ₹

10,000. Its Liquid Ratio will be:

a) 3.6 : 1

b) 2.2 : 1

c) 3 : 2

d) 2.05 : 1

Ans – b)

A firm’s current ratio is 1.8 : 1. Its current liabilities are ₹ 80,000. Its working capital will be:

a) ₹ 1,20,000

b) ₹ 1,60,000

c) ₹ 64,000

d) ₹ 2,80,000

Ans – c)

Current Assets ₹ 77,000; Inventory ₹ 22,000; Prepaid Expenses ₹ 2,500 and Current Ratio is 2.2:1; then Liquid Ratio will be:

a) 3 : 1

b) 1.5 : 1

c) 1 : 1

d) None of these

Ans – b)

Total Revenue from Operations ₹ 15,00,000; Cost of Revenue from Operations ₹ 9,00,000 and Operting Expenses ₹ 2,25,000. Operating

Ratio will be:

a) 75%

b) 25%

c) 60%

d) 15%

Ans – a)

A firm has current ratio of 5 : 2. Its Current Assets are ₹ 6,50,000 and Inventories ₹ 26,000. The liquid ratio of the fimr is:

a) 2.8 : 1

b) 2.4 : 1

c) 5:3:2

d) None of these

Ans – b)

Current Assets of a concern are ₹ 7,00,000. Its current ratio is 7:2 and liquid ratio is 3:1. The value of its liquid assets is:

a) ₹4,00,000

b) ₹6,00,000

c) ₹80,000

d) None of these

Ans – b)

In a concern, Total Assets to Debt Ratio is 3:1. Its total assets are ₹ 12,00,000 and current liabilities are ₹80,000. Its

equity is of:

a) ₹ 2,40,000

b) ₹ 6,00,000

c) ₹ 7,20,000

d) None of these

Ans – c)

On the basis of the following information: answer the question that follows:

Share capital ₹ 5,00,000, Reserve and surplus ₹ 1,20,000. Current Assets ₹ 1,80,000 and Non current Assets ₹ 7,20,000

The Proprietary ratio is:

a) 1.25:1

b) 0.68:1

c) 2:5

d) None of these

Ans – b)

Calculate Working Capital Turnover Ratio from the following information:

Revenue from operations ₹ 12,00,000

Current Assets ₹ 3,00,000

Total Assets ₹ 8,00,000

Non-Current Liabilities ₹ 3,00,000

Shareholders Funds ₹ 4,00,000

a) 6 times

b) 4 times

c) 2.5 times

d) None of these

Ans – a)

XYZ Ltd. earned a gross profit of ₹ 6,00,000 during the year and its gross profit ratio is 30%. Thus, its Revenue from Operations is:

a) ₹ 40,00,000

b) ₹ 20,00,000

c) ₹ 25,00,000

d) None of these

Ans – b)

Compute gross profit ratio; if revenue from operations is ₹ 3,25,000 and gross profit is 30% of the cost.

a) 23%

b) 32%

c) 27%

d) None of these

Ans – a)

From the following information, calculate Operating Ratio:

Cost of Revenue from Operations ₹ 4,00,000

Operating Expenses ₹ 55,000

Revenue from Operations ₹ 6,50,000

a) 55%

b) 70%

c) 65%

d) None of these

Ans – b)

From the following information, calculate Operating Rato:

Revenue from Operations ₹ 6,30,000

Rate of Gross Profit on Cost ₹ 40%

Selling Expenses ₹ 12,500

Administrative Expenses ₹ 10,000

a) 55%

b) 85%

c) 75%

d) None of these

Ans – c)

From the following information, Calcualte Return on Investment.

Net Profit after Interest and Tax ₹ 4,05,000

9% Debentures ₹ 15,00,000

Tax @10%

Capital Employed ₹ 3,00,000

a) 8%

b) 12%

c) 19.85%

d) 15%

Ans – c)

A company’s current ratio is 3:1 and liquid ratio is 1.8:1. If its current liabilities are ₹ 2,00,000, the value of inventory

is:

a) ₹ 2,40,000

b) ₹ 3,60,000

c) ₹ 1,20,000

d) None of these

Ans – a)

A company’s current ratio is 2.5:1 and liquid ratio is 3:2. If its current assets are ₹ 7,20,000, its inventory is:

a) ₹ 2,88,000

b) ₹ 4,80,000

c) ₹ 3,28,000

d) None of these

Ans – a)

If the average inventory is ₹ 1,00,000 and closing inventory is two times more than that in the begining, then the value the

closing inventory:

a) ₹ 2,00,000

b) ₹ 1,50,000

c) ₹ 1,80,000

d) None of these

Ans – b)

A company’s revenue from opeartoins is ₹ 20,00,000, cost of revenue from operations is ₹ 14,00,000, closing inventories ₹ 50,000

and indirect expenses are ₹ 2,00,000. The amount of gross profit on the basis of given information is:

a) 40%

b) 25%

c) 30%

d) 35%

Ans – c)

Purchase of a fixed asset by issuing debentures will ** _** the debt equity ratio (2:1).

a) Increase

b) Decrease

c) No change

d) May increase or decrease

Ans – a)

If capital employed is ₹ 8,00,000, total debt is ₹ 5,00,000, current liability is ₹ 2,00,000 then the value of debt equity

ratio is:

a) 2:5

b) 3:5

c) 5:8

d) None of these

Ans – b)

If Net Revenue form Operations of a firm are ₹ 15,00,000, Gross Profit is ₹ 9,00,000 and Operating Expenses are ₹ 75,000.

The opearting profit ratio will be:

a) 45%

b) 50%

c) 55%

d) 65%

Ans – c)

The current assets and current liabilities of Accounts Guru Ltd are ₹ 3,00,000 and ₹ 2,00,000 respectively. The company is

planning to avail a bank loan. The minimum current ratio required by bank is 2:1 to consider the loan proposed. The amount of

sundry creditors to be paid to achieve the desired level of current ratio will be:

a) ₹ 1,00,000

b) ₹ 2,00,000

c) ₹ 1,50,000

d) ₹ 3,00,000

Ans – a)

Bhumi Ltd. has current ratio of 4 : 1 and quick ratio of 2.5:1. Assuming inventories (stock) are ₹ 22,500. The amount of total

current assets will be:

a) ₹ 60,000

b) ₹ 45,000

c) ₹ 80,000

d) ₹ 54,200

Ans – a)

A firm has current ratio of 4:1 and quick ratio of 2.5:1. Assuming inventories (stock) are ₹ 22,500, Total amount of current liabilities

will be:

a) ₹ 20,000

b) ₹ 16,000

c) ₹ 15,000

d) ₹ 30,000

Ans – c)

If Jyoti Ltd. has a liquid ratio of 7:3 and its stock is ₹ 25,000 and current liabilities are ₹ 75,000. The amount of liquid

assets will be:

a) ₹ 1,75,000

b) ₹ 2,00,000

c) ₹ 2,25,000

d) ₹ 5,000

Ans – a)

If X Ltd. has a liquid ratio of 7:3 and its stock is ₹ 25,000 and current liabilities are ₹ 75,000. The amount of the current

assets will be:

a) ₹ 1,25,200

b) ₹ 54,000

c) ₹ 2,00,000

d) ₹ 65,200

Ans – c)

If PQR Ltd. has a liquid ratio of 7:3 and its stock is ₹25,000 and current liabilities are ₹ 75,000, the current ratio will

be:

a) 2.67:1

b) 2.35:1

c) 4:1

d) 2.36:1

Ans – a)

Sheetal Ltd. has a current ratio of 3:1. It its stock is ₹40,000 and total current liabilities are ₹ 75,000, the quick ratio will

be:

a) 2.7:1

b) 2.47:1

c) 4:1

d) 2.36:1

Ans – b)

Shalini Ltd. has a current ratio of 3:1. It its stock is ₹ 40,000 and total current liabilities are ₹ 75,000, the amount

of current assets of Shalini Ltd will be:

a) ₹ 75,000

b) ₹ 2,25,000

c) ₹ 2,50,000

d) ₹ 98,500

Ans – b)

Aakash Ltd has a current ratio of 3:1. It its stock is ₹ 40,000 and total current liabilities are ₹ 75,000, the amount

of liquied assets of Aakash Ltd will be:

a) ₹ 1,85,000

b) ₹ 2,25,000

c) ₹ 2,50,000

d) ₹ 98,500

Ans – a)

If Current assets of a company are ₹ 5,00,000; current ratio 2.5:1 and Quick Ratio 1:1. The value of current liabilities

will be:

a) ₹ 1,20,000

b) ₹ 2,10,000

c) ₹ 2,00,000

d) ₹ 1,50,000

Ans – c)

If Current assets of a company are ₹ 5,00,000; current ratio 2.5:1 and Quick Ratio 1:1, the value of liquid assets will be:

a) ₹ 1,20,000

b) ₹ 2,10,000

c) ₹ 2,00,000

d) ₹ 1,50,000

Ans – c)

If Current assets of a company are ₹ 5,00,000; current ratio 2.5:1 and Quick Ratio 1:1, the value of inventory will be:

a) ₹ 1,20,000

b) ₹ 2,10,000

c) ₹ 3,00,000

d) ₹ 1,50,000

Ans – c)

Current liabilities of a company are ₹ 1,20,000. Its current ratio is 3.00 and liquid ratio is 0.90. The amount of Current

Asset will be:

a) ₹ 1,20,000

b) ₹ 2,10,000

c) ₹ 3,60,000

d) ₹ 1,50,000

Ans – c)

Current liabilities of a company are ₹ 1,20,000. Its current ratio is 3.00 and liquid ratio is 0.90. The amount of Liquid

Assets will be?

a) ₹ 1,20,000

b) ₹ 2,10,000

c) ₹ 3,60,000

d) ₹ 1,08,000

Ans – d)

Current liabilities of a company are ₹ 1,20,000. Its current ratio is 3.00 an liquid ratio is 0.90. The amount of Inventory

will be:

a) ₹ 1,20,000

b) ₹ 2,10,000

c) ₹ 2,52,000

d) ₹ 1,50,000

Ans – c)

Current ratio of a company is 3:1, working capital is ₹ 30,000. The amount of current assets and current liabilities is:

a) 12,000; 24,000

b) 21,000; 45,000

c) 45,000; 15,000

d) 50,000; 65,000

Ans – c)

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