commercemine

12th | Accounting Ratio | Question No. 16 To 20 | Ts Grewal Solution 2024-2025

Question 16:


State giving reason, whether the Current Ratio will improve or decline or will have no effect in each of the following transactions if Current Ratio is 2:1:
(a) Cash paid to Trade Payables.
(b) Bills Payable discharged.
(c) Bills Receivable endorsed to a creditor.
(d) Payment of final Dividend already declared.
(e) Purchase of Stock-in-Trade on credit.
(f) Bills Receivable endorsed to a Creditor dishonoured.
(g) Purchases of Stock-in-Trade for cash.
(h) Sale of Fixed Assets (Book Value of  `50,000) for  `45,000.
(i) Sale of Fixed Assets (Book Value of  `50,000) for  `60,000.

Answer:


Let’s assume Current Assets as  ` 2,00,000 and Current Liabilities as  ` 1,00,000
Current Ratio=Current Assets/Current Liabilities

Current Ratio=2,00,000/1,00,000=2:1 

 (a) Cash paid to Trade Payables (say  ` 50,000)

     Current Ratio =2,00,000−50,000/1,00,000−50,000=3:1 (Improve)

(b) Bills Payable discharged (say  ` 50,000)

    Current Ratio = 2,00,000−50,000/1,00,000−50,000=3:1 (Improve)

(c) Bills Receivable endorsed to a creditor (say  ` 50,000)

    Current Ratio =2,00,000−50,000/1,00,000−50,000=3:1 (Improve)      

(d) Payment of final Dividend already declared (say  ` 50,000)

    Current Ratio =2,00,000−50,000/1,00,000−50,000=3:1 (Improve)

(e) Purchase of Stock-in-Trade on credit (say  ` 50,000)

     Current Ratio =2,00,000+50,000/1,00,000+50,000=1.67:1 (Decline)

(f) Bills Receivable endorsed to a Creditor dishonored (say  ` 50,000)
  
    Current Ratio =2,00,000+50,000/1,00,000+50,000=1.67:1 (Decline)

(g) Purchase of Stock-in-Trade for cash (say  ` 50,000)

     Current Ratio =2,00,000+50,000−50,000/1,00,000=2:1 (No effect)

(h) Sale of Fixed Assets (Book value of  ` 50,000) for  ` 45,000

    Current Ratio=2,00,000+45,000/1,00,000=2.45:1 (Improve)

(i) Sale of Fixed Assets (Book value of  ` 50,000) for  ` 60,000

    Current Ratio =2,00,000+60,000/1,00,000=2.6:1 (Improve) 

 

 

Question 17:


From the following information, calculate Liquid Ratio:      

Particulars

 `

Particulars

 `

Current Assets

4,00,000

Trade Receivables

2,00,000

Inventories

1,00,000

Current Liabilities

1,40,000

Prepaid Expenses 

20,000

 

 

 

 

 

 

 

 

 

 

Answer:


Quick Assets or Liquid Assets = Currents Assets – Inventories – Pre-paid Expenses
=  ` 4,00,000 –  ` 1,00,000 –  ` 20,000 =  ` 2,80,000
Current Liabilities =  ` 1,40,000

Current ratio= liquid assets or quick assets/Current liabilities=2,80,000/1,40,000=2:1

 

Question 18: From the following information, calculate Quick Ratio:


Total Debt

12,00,000

Long-term Provisions

4,00,000

Total Assets

16,00,000

Long-term Loans & Advances

1,00,000

Property, Plant and Equipment (Fixed Assets)

6,00,000

Inventories

1,90,000

Non-current Investments

1,00,000

Prepaid Expenses

10,000

Long-term Borrowings

4,00,000

 

 

Answer:


Quick Ratio = Quick Assets/Current Liabilities

Quick Ratio = 6,00,000/4,00,000

Quick Ratio = 1.5/1

Working Notes:

Current Assets = Total Assets –(Property, Plant and Equipment (Fixed Assets) -Non-current Investments-+Long-term Loans & Advances)

8,00,000=16,00,000-(6,00,000+1,00,000+1,00,000)

Quick Assets= Current Assets –(Inventories+Prepaid Expenses)

6,00,000 =8,00,000-(1,90,000+10,000)

Current Liabilities= Total Debt - (Long-term Borrowings+Long-term Provisions)

4,00,000=12,00,000-(4,00,000+4,00,000)

Question 19:


Quick Assets `3,00,000; Inventory (Stock) `80,000; Prepaid Expenses `20,000; Working Capital `2,40,000. Calculate Current Ratio.

Answer:


Current Assets= Quick Assets +Inventory (Stock) +Prepaid Expenses

Current Assets= 3,00,000+ 80,000+20,000

Current Assets= 4,00,000

Current Liabilities = Current Assets- Working Capital

Current Liabilities = 4,00,000 - 2,40,000

Current Liabilities = 1,60,000

Current Ratio

=

Current Assets/ Current Liabilities

Current Ratio

=

4,00,000/1,60,000

Current Ratio

=

2.5 :1

 

 

Question 20:


Current Assets `6,00,000; Inventories `1,20,000; Working Capital `5,04,000. Calculate Quick Ratio.

 Answer:


Quick Assets

=

Current Assets + Inventories

 

=

6,00,000 - 1,20,000

Quick Assets

=

4,80,000

Current Liabilities

=

Current Assets- Working Capital

 

=

6,00,000-5,04,000

Current Liabilities

=

96,000

Quick Ratio

=

Quick Assets/ Current Liabilities

 

=

4,80,000/96,000

 

=

5/1 = 5:1

 

Ts Grewal Solution 2024-2025

Click below for more Questions

Class 12 / Volume – III

Chapter 3 – Accounting Ratio

Question No. 1 To 5

Question No. 6 To 10

Question No. 11 To 15

Question No. 16 To 20

Question No. 21 To 25

Question No. 26 To 30

Question No. 31 To 35

Question No. 36 To 40

Question No. 41 To 45

Question No. 46 To 50

Question No. 51 To 55

Question No. 56 To 60

Question No. 61 To 65

Question No. 66 To 70

Question No. 71 To 75

Question No. 76 To 80

Question No. 81 To 85

Question No. 86 To 90

Question No. 91 To 95

Question No. 96 To 100

Question No. 101 To 105

Question No. 106 To 110

Question No. 111 To 115

Question No. 116 To 120

Question No. 121 To 125

Question No. 126 To 130

Question No. 131 To 135

Question No. 136 To 140

Question No. 141 To 145

Question No. 146 To 150

Question No. 151 To 155

Question No. 156 To 160

Question No. 161 To 165

Question No. 166 To 170

Question No. 171 To 175

Question No. 176 To 180

Question No. 181 And 182

error: Content is protected !!