Question 31:
Quick Ratio of Z Ltd. is 1:1. State, with reason, which of the following transactions would (i) Increase (ii) Decrease or (ii) Not change the ratio.
(a) Included in the trade payables was bill payable of 3,000 which was met on maturity;
(b) Debentures of 50,000 were converted into equity shares.
(CBSE 2014)
Answer:
|
Transaction |
Impact |
|
Paid a bills payable ` 5,000 on maturity |
As cash is going out, quick assets are decreasing by 3,000 and same amount is decreasing from current liabilities. So, quick ratio will not change. |
|
Converted Debentures into Equity shares |
As Debenture and Equity shares are not the part of Quick assets and Current liabilities. So, quick ratio will not change. |
Question 32:
The Quick Ratio
of a company is 0.8:1. State with reason, whether the following transactions
will increase, decrease or not change the Quick Ratio:
(i) Purchase of loose tools for `2,000; (ii) Insurance
premium paid in advance `500; (iii) Sale of
goods on credit `3,000; (iv) Honoured
a bills payable of `5,000 on maturity.
Answer:
|
Transaction |
Impact |
|
Purchase of loose tools ` 2,000 |
As cash is going out, quick assets are decreasing by 2,000. So, quick ratio will decrease. |
|
Insurance premium paid in advance ` 500 |
As cash is going out, quick assets are decreasing by 500. So, quick ratio will decrease. |
|
Sale of goods on credit ` 3,000 |
As debtors increase, quick assets also increase by 3,000. So, quick ratio will increase. |
|
Honoured a bills payable ` 5,000 on maturity |
As cash is going out, quick assets are decreasing by 5,000 and since bill is honoured current liabilities are decreasing. Thus, quick ratio will decrease. |
Question 33:
Venus Limited's Inventory is `3,00,000. Total Liquid Assets are `12,00,000 and Quick Ratio is 2:1. Work out Current Ratio.
Answer:
Quick ratio = Quick Assets/Current assets=2:1
Quick Assets = 12,00,000
Current liabilities Quick assets/2=12,00,000/2=6,00,000
Current Assets = Quick Assets + Stock
= 12,00,000 + 3,00,000 = 15,00,000
Current ratio= Current assets / Current liabilities=15,00,000/6,00,000=2.5:1
Question 34:
Total Assets `11,00,000;
Fixed Assets `5,00,000;
Capital Employed `10,00,000.
There were no Long-term Investments.
Calculate Current Ratio.
Answer:
Current Assets = Total Assets − Fixed Assets
Fixed Assets = 5,00,000
Total Assets = 11,00,000
∴ Current Assets = 11,00,000 − 5,00,000 = 6,00,000
Current Liabilities = Total Assets − Capital Employed
= 11,00,000 − 10,00,000 = 1,00,000
Current ratio= Current Assets/ Current liabilities=6,00,000/1,00,000=6:1
Question 35:
Capital Employed `20,00,000; Fixed Assets `14,00,000; Current Liabilities `2,00,000. There are no Long-term Investments. Calculate Current Ratio.
Answer:
Capital Employed = 20,00,000
Fixed Assets = 14,00,000
Current Assets = Capital Employed + Current Liabilities − Fixed Assets
= 20,00,000 + 2,00,000 − 14,00,000 = 8,00,000
Current ratio= Current Assets/ Current liabilities=8,00,000/2,00,000=4:1
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I
Chapter 3 – Accounting Ratio