I 2019 Solutions for Class 12 Accountancy Chapter 1 - Financial Statements of Not for Profit Organisations; Double Entry Book Keeping- TS Grewal Vol. TS Grewal Accountancy Class 12 Solutions Chapter 8 Accounting for Share Capital. Ratios simply mean one number expressed in terms of another. Calculate Opening Inventory and Closing Inventory if Inventory at the end is 2.5 times more than that in the beginning. Working Capital is ₹ 9,00,000; Trade payables ₹ 90,000; and Other Current Liabilities are ₹ 2,10,000. July 20, 2019 by Prasanna Leave a Comment. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Question 1. Following is the Balance Sheet of the Bharati Ltd. as at 31st March, 2019: Surplus, i.e., Balance in Statement of Profit and Loss: Add: Transfer from Statement of Profit and Loss. (h) Sale of Fixed Assets (Book Value of ₹50,000) for ₹45,000. Question 2. In this way net profit ratio will not tell the truth about the profit of the organisation. The solutions not only explain the exercise questions but also the unit-wise and page-wise questions. Thus, incomes such as interest on investments outside the business, profit on sales of fixed assets and losses on sales of fixed assets, etc are excluded. Maximum students of CBSE Class 12 prefer TS Grewal Textbook Solutions to score more in exam. We hope the TS Grewal Accountancy Class 12 Solutions Chapter 1 Accounting for Partnership Firms – Fundamentals help you. These ratios reveal the current financial position of the business. (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Propietory Ratio. State with reason, whether the Proprietary Ratio will improve, decline or will not change because of the following transactions if Proprietary Ratio is 0.8 : 1: (i) Obtained a loan of ₹ 5,00,000 from State Bank of India payable after five years. Reliability of Ratios: Since, ratios are calculated based on the financial information, if the information available is not correct ratios calculated using such information will also be incorrect. Note :In this question current assetts should be considered as other current asset and stock is separate, in other words, other current assets means liquid assets. Revenue from Operations ₹4,00,000; Gross Profit Ratio 25%; Operating Ratio 90%. Capital Employed ₹ 12,00,000; Net Fixed Assets 8,00,000; Cost of Goods Sold or Cost of Revenue from Operations ₹ 40,00,000; Gross Profit is 20% on Cost. Calculate Inventory Turnover Ratio in each of the following alternative cases:Case 1: Cash Sales 25% of Credit Sales; Credit Sales ₹3,00,000; Gross Profit 20% on Revenue from Operations, i.e., Net Sales; Closing Inventory ₹1,60,000; Opening Inventory ₹40,000.Case 2: Cash Sales 20% of Total Sales; Credit Sales ₹4,50,000; Gross Profit 25% on Cost; Opening Inventory ₹37,500; Closing Inventory ₹1,12,500. A high Interest Coverage Ratio implies that the company can easily meet all its interest obligations out of its profit. (iv) Trade Receivables at the end are 3 Times more than that of in the beginning. (ii) Functional Classification This classification of ratios is based on the functional need and the purpose for calculating ratio. Selling price = 25% above cost Answer True, (d) A ratio is always expressed as a quotient of one number divided by another. Total liquid assets are Rs. Answer Average stock = ? Afterwards it purchased goods for ₹30,000 on credit. It is generally expressed in percentage, Operating ratio measures the cost of operations per dollar of sales. (iv) Issued equity shares to the vendor of building purchased for ₹ 7,00,000. Gopal Ltd. was registered with an authorised capital of ₹ 50,00,000 divided into Equity Shares of ₹ 100 each. (a) Inventory Turnover (b) Debtor Turnover (a) liquidity (b) activity Question 15. NCERT Solutions for Class 6, 7, 8, 9, 10, 11 and 12, NCERT Solutions CBSE Sample Papers AccountancyClass 12 Accountancy, • State which of the following statements are True or False. We have provided Accounting Ratios Class 12 Accountancy MCQs Questions with Answers to help students understand the concept very well. On the basis of accounts of financial statements, the Traditional Classification is further divided into the following categories Calculate Operating Profit Ratio. Question 2. (c) Payables Turnover (d) Working Capital Turnover Interest Coverage Ratio :This ratio deals only with servicing of return on loan as interest. Question 1. Solvency of a concern can be measured in two ways first to check the security of Debt and second is to check the security of return on Debt. Calculate Return on Investment (ROI) from the following details: Net Profit after Tax ₹ 6,50,000; Rate of Income Tax 50%; 10% Debentures of ₹ 100 each ₹ 10,00,000; Fixed Assets at cost ₹ 22,50,000; Accumulated Depreciation on Fixed Assets up to date ₹ 2,50,000; Current Assets ₹ 12,00,000; Current Liabilities ₹ 4,00,000. The best app for CBSE students now provides accounting for partnership firm’s fundamentals class 12 Notes latest chapter wise notes for quick preparation of CBSE board exams and school-based annual examinations. Download NCERT Solutions for Class 12 Accountancy Part II Chapter 5 Accounting Ratios in pdf. There chapter wise Practice Questions with complete solutions are available for download in … This is closely related to the ratio of operating profit to net sales. NCERT Solutions for Class 12 Accountancy Part II Chapter 5 Accounting Ratios. Following formula is used to calculate debt to equity ratio, Proprietory Ratio/Total Assets to Debt Ratio: Total assets to Debt Ratio or Proprietory Ratio are a variant of the debt equity ratio. Question 12. 3,22,250. Calculate Operating Ratio from the following information:Operating Cost ₹ 6,80,000; Gross Profit 25%; Operating Expenses ₹ 80,000. In this way they are interested in calculating Long term Solvency Ratios like, Debt-Equity Ratio, Proprietory Ratio, Total Assets to Debt Ratio, Interest Coverage Ratio, etc. Inventory Turnover Ratio 8 times; Inventory in the beginning is 2 times more than the inventory at the end. Stock turnover ratio/inventory turnover ratio indicates the number of time the stock has been turned over during the period and evaluates the efficiency with which a firm is able to manage its inventory. Proprietory / Equity ratio indicates the long-term or future solvency position of the business. If the Inventories is  ₹  24,000; calculate total Current Liabilities and Current Assets. It is a well known fact that the security of the funds is directly related to the profitability and operational efficiency of the business. For calculating the security of debt we calculate Debt-Equity Ratio, Proprietory Ratio, Fixed Assets – Proprietory Fund Ratio, etc. Case 3 : Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000.Case 4 : Closing Trade Payables (including ₹ 25,000 due to a supplier of machinery) ₹ 55,000; Net Credit Purchases ₹ 3,60,000. Following figures have been extracted from Shivalika Mills Ltd. (c) Debt (d) Profitability A and B are sharing profits and losses equally. NCERT Solution For Class 12 Accountancy Chapter 5 – Accounting Ratios furnishes us with an all-inclusive data to all the concepts. Note :According to the ratio, current asset is less than current liability hence working capital should be negative. From the following information, calculate Total Assets to Debt Ratio: From the following information, calculate Proprietary Ratio: From the following infromation, calculate Proprietary Ratio: Calculate Proprietary Ratio from the following: (c) Short-term Provisions (Provision for Tax). Calculate Return on Investment. The following formula is used to calculate the creditors Turnover Ratio, (d)Working Capital Turnover Ratio Working capital turnover ratio indicates the velocity of the utilization of net working capital. Helpful in Forecasting: Accounting ratios are very helpful in forecasting and preparing the plans for the future. Formula of Proprietary/Equity Ratio It is also known as equity ratio or net worth to total assets ratio. Question 4. (iii) Cash Sale of Stock-in-Trade ₹40,000. 9,00,000. Calculate the amount of Current Assets and Current Liabilities. Public applied for 4,50,000 shares and allotment was made to […] Importance of Current Ratio Current Ratio Provides a measure of degree to which current assets cover current liabilities. On the other hand, insurance company involved in service business and involved in delivering service there is no question of inventory because service is perishable in nature and cannot be stored. And for calculating Security of Return on Debt we calculate Interest Coverage Ratio. Solved Cbse Class 12 Accountancy Full Project(Comprehensive Project, Ratio Analysis and Cash Flow Statements with Conclusion) 2,065,308 views. Calculate Working Capital Turnover Ratio. Calculate values of Current Assets, Liquid Assets and Inventory. Answer (c) Average collection period, (ii) The………measures the activity of a firm’s inventory. Balance Sheet had the following amounts as at 31st March, 2019: Calculate ratios indicating the Long-term and the Short-term financial position of the company. CBSE Class 12 Biology From the information given below, calculate Trade Receivables Turnover Ratio:Credit Revenue from Operations, i.e., Credit Sales ₹8,00,000; Opening Trade Receivables ₹1,20,000; and Closing Trade Receivables ₹2,00,000.State giving reason, which of the following would increase, decrease or not change Trade Receivables Turnover Ratio:(i) Collection from Trade Receivables ₹40,000. There were no Long-term Investments.Calculate Current Ratio. Revenue from Operations (Net Sales) ₹ 1,00,000; cost of Revenue from Operations (Cost of Goods Sold) was 80% of sales; Equity Share Capital ₹ 7,00,000; General Reserve ₹ 3,00,000; Operating Expenses ₹ 10,000; Quick Assets ₹ 6,00,000; 9% Debentures ₹ 5,00,000; Closing Inventory ₹ 50,000; Prepaid Expenses ₹ 10,000 and Current Liabilities ₹ 4,00,000. Answer Yes it is true that the liquidity of a business firm is measured by its ability to pay its long term obligations as they become due. Note :In this question stock is given separately from current assets, hence* it is added to make total current assets. In this context there are four categories of users who are interested in financial ratios. Discuss the importance of current and liquid ratio. (a) Activity (b) Liquidity Quick Ratio of a company is 2:1. The functional ratios are further divided into the following categories (iii) Debtors Turnover Ratio, Question 18. Ratio of Current Assets (₹3,00,000) to Current Liabilities (₹2,00,000) is 1.5:1. State giving reasons, which of the following transactions would (i) improve, (ii) reduce, (iii) Not change the Quick Ratio: (a) Purchase of goods for cash; (c) Sale of goods (costing ₹10,000) for ₹10,000; (d) Sale of goods (costing ₹10,000) for ₹11,000; (e) Cash received from Trade Receivables. cannot be easily sold off. […] Management is always interested in future growth of the organisation. 80,000 Calculate Current Ratio. Here the long term obligation means payments of principal amount on the due date and payments of interests on the regular basis. (iv) Stock Turnover Ratio (v) Fixed Assets Turnover Ratio. Case 4: Cost of Revenue from Operations or Cost of Goods Sold ₹4,50,000; Gross Profit on Sales 20%; Cash Sales 25% of Net Credit Sales, Opening Trade Receivables ₹90,000; Closing Trade Receivables ₹60,000. Total Liquid Assts are ₹12,00,000 and Quick Ratio is 2:1. Problem 1: The following is the Balance Sheet of a company as on 31st March: Problem 2: From the following particulars found in the Trading, Profit and Loss Account of A Company Ltd., work out the operation ratio of the business concern: Closing Inventory is more by ₹ 4,000 than the Opening Inventory. If its inventory is  ₹  36,000, find out its total Current Assets and total Current Liabilities. (b) Bills Payable discharged. Current Liabilities of a company are  ₹  1,50,000. However, it must be interpreted carefully because window-dressing is possible by manipulating the components of current assets and current liabilities, e.g., it can be manipulated by making payment to creditors. The standard for this ratio is 1:1. CBSE Class 12 Accountancy Chapter 13 Important Questions – Free PDF Download. 2. Answer Liquidity ratios are calculated to determine the short-term solvency of the business. (iv) Short Term Creditors :Short term creditors are those creditors who provide financial assistance through short term credit (Generally less than one year). Explain the significance of ratio analysis to them. These are the management, investors, long term creditors and short term creditors. Question 5. Calculate Current Ratio. Calculate Inventory Turnover Ratio from the data given Below: From the following information, calculate value of Opening Inventory: Goods are sold at a profit of 25% on cost. Explain. Calculate Operating Ratio. Question 1. Answer The solvency position of any firm is determined and measured with the help of solvency ratios. If Trade Receivables Turnover Ratio is 8 times, calculate Trade Receivables in the Beginning and at the end of the year. Question 21. Compute amount of Gross Profit and Revenue from Operations (Net Sales). Its Current Ratio is 2.5 : 1 and Quick Ratio is 1 : 1. Calculate individual partner’s gain or sacrifice due to change in ratio. (e) Bills Payable discharged. Cost of Revenue from Operations or Cost of Goods Sold ₹8,00,000. Calculate the amount of gross profit Opening Inventory ₹80,000; Purchases ₹4,30,900; Direct Expenses ₹4,000; Closing Inventory ₹1,60,000; Administrative Expenses ₹21,100; Selling and Distribution Expenses ₹40,000; Revenue from Operations, i.e., Net Sales ₹10,00,000. (b) liquid ratio, accounts debtors Standard for liquid ratio is 1:1. Capital Employed ₹8,00,000; Shareholders' Funds ₹2,00,000. How are they worked out? This will clear students doubts about any question and improve application skills while preparing for board exams. RBSE Solutions for Class 12 Sanskrit; RBSE Class 11; RBSE Solutions for Class 12 Accountancy Chapter 11 Ratio Analysis. Net Profit before Interest and Tax ₹2,50,000; Capital Employed ₹10,00,000. There are two different ways to measure the liquidity of a firm first through current ratio of the firm and second through quick ratio of the firm. Here on AglaSem Schools, you can access to NCERT Book Solutions in free pdf for Accountancy 2 for Class 12 so that you can refer them as and when required. The following is the summarised Profit and Loss account and the Balance Sheet of Nigam Limited for the year ended March 31, 2007, Calculate Calculate the current assets and current liabilities. Ratio of Current Assets (₹8,75,000) to Current Liabilities (₹3,50,000) is 2.5:1 The firm wants to maintain Current Ratio of 2:1 by purchasing goods on credit. Inventory in the beginning of the year ₹ 60,000. X Ltd. has a Current Ratio of 3.5 : 1 and Quick Ratio of 2 : 1. Xolo Ltd.'s Liquidity Ratio is 2.5 : 1. Capital Employed ₹10,00,000; Fixed Assets ₹7,00,000; Current Liablities ₹1,00,000. (b) Balance Sheet Ratios: like Current Ratio, Debt Equity Ratio, etc. (a) current ratio, accounts debtors A brief description of the above mentioned ratios is as follows. Calculate Stock Turnover Ratio from the data given below. State giving reason, which of the following transactions will (a) increase or (b) decrease or (c) not alter the Gross Profit Ratio. (b) Solvency Ratio :These ratios are calculated to determine long term solvency. 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