# MCQ Questions for Class 12 Accountancy Chapter 5 Accounting Ratios

Accounting Ratios Class 12 MCQ is one of the best strategies to prepare for the CBSE Class 12 Board exam. If you want to complete a grasp concept or work on one’s score, there is no method except constant practice. Students can improve their speed and accuracy by doing more MCQ of Accounting Ratios Class 12 which will help them all through their board test.

## Accounting Ratios Class 12 Accountancy MCQs Questions with Answers

Class 12 Accountancy MCQ with answers are given here to chapter the Accounting Ratios. These MCQs are based on the latest CBSE board syllabus and relate to the latest Class 12 Accountancy syllabus. By Solving these Class 12 MCQs, you will be able to analyze all of the concepts quickly in the chapter and get ready for the Class 12 Annual exam.

Learn Accounting Ratios Class 12 MCQ Questions with answers PDF free download according to the latest CBSE and NCERT syllabus. Students should prepare for the examination by solving CBSE Accounting Ratios Class 12 MCQ with answers given below.

Question 1: Long term creditors are those creditors who provide funds for
(a) More than one year
(b) Only one year
(c) More than one year and Only one year
(d) None of the options

Answer

More than one year

Question 2: Fixed Assets to Proprietors Fund Ratio is equal to
(a) Fixed Assets/Proprietors fund
(b) Fixed Assets+Proprietors fund
(c) Fixed Assets-Proprietors fund
(d) None of the options

Answer

Fixed Assets/Proprietors fund

Question 3: A firm’s credit revenue from operations is Rs.3,60,000, cash revenue from operations is Rs.70,000.Cost of revenue from operations is Rs.3,61,200. Its gross profit ratio will be:
(a) 11%
(b) 15%
(c) 18%
(d) 16%

Answer

D

Question 4: Average Inventory is equal to
(a) Opening stock + Closing stock/2
(b) Opening stock – Closing stock/2
(c) Opening stock + Closing stock/2 and Opening stock – Closing stock/2
(d) None of the options

Answer

Opening stock + Closing stock/2

Question 5: Equity ratio relates to
(a) Shareholders funds to total assets
(b) Shareholders funds to total Liabilities
(c) Shareholders funds to total assets and Shareholders funds to total Liabilities
(d) None of the options

Answer

Shareholders funds to total assets

Question 6: Working Capital is the :
(a) Cash and Bank Balance
(b) Capital borrowed from Banks
(c) Difference between Current Assets and Current Liabilities
(d) Difference between Current Assets and Fixed assets

Answer

C

Question 7: Two basic measures of liquidity are:
(a) Inventory turnover and Current ratio
(b) Current ratio and Quick ratio
(c) Gross Profit ratio and Operating ratio
(d) Current ratio and average Collection period

Answer

B

Question 8: Liquid Assets do not include:
(a) Bills Receivable
(b) Debtors
(c) Inventory
(d) Bank Balance

Answer

C

Question 9: Ideal Current Ratio is:
(a) 1:1
(b) 1:2
(c) 1:3
(d) 2:1

Answer

D

Question 10: Fixed Assets Rs.5,00,000; Current Assets Rs.3,00,000; Equity Share Capital Rs.4,00,000; ReserveRs.2,00,000;Long –term debts Rs.40,000.Proprietory Ratio will be:
(a) 75%
(b) 80%
(c) 125%
(d) 133%

Answer

A

Question 11: Current assets include only those assets which are expected to be realized within……
(a) 3 months
(b) 6 months
(c) 1 year
(d) 2 years

Answer

C

Question 12: A Company’s Quick Ratio is 1.5:1; Current Liabilities are Rs.2,00,000 and Inventory isRs.1,80,000.Current Ratio will be:
(a) 0.9:1
(b) 1.9:1
(c) 1.4:1
(d) 2.4:1

Answer

D

Question 14: Current Ratio is :
(a) Liquid Assets/Current Assets
(b) Fixed Assets/Current Assets
(c) Current Assets/Current Liabilities
(d) Liquid assets/Current Liabilities

Answer

C

Question 15: Current ratio is:
(a) Solvency Ratio
(b) Liquidity ratio
(c) Activity Ratio
(d) Profitability Ratio

Answer

B

Question 16: A Company’s liquid assets are Rs.5,00,000 and its current liabilities are Rs.3,00,000.Thereafter, it paid Rs.1,00,000 to its trade payables. Quick ratio will be:
(a) 1.33:1
(b) 2.5:1
(c) 1.67:1
(d) 2:1

Answer

D

Question 17: On the basis of the following information received from a firm, its Proprietory Ratio will be:Fixed Assets Rs.3,30,000; Current Assets Rs.1,90,000; Preliminary Expenses Rs.30,000; Equity shareCapital Rs.2,44,000; Preference Share capital Rs.1,70,000; Reserve Fund Rs.58,000.
(a) 70%
(b) 80%
(c) 85%
(d) 90%

Answer

C

Question 18: If Debt equity ratio exceeds ……………., it indicates risky financial position.
(a) 1:1
(b) 2:1
(c) 1:2
(d) 3:1

Answer

B

Question 19: Opening Inventory Rs.1,00,000; Closing Inventory Rs.1,50,000; Purchases Rs.6,00,000; CarriageRs.25,000; wages Rs.2,00,000. Inventory Turnover Ratio will be:
(a) 6.6 Times
(b) 7.4 Times
(c) 7 Times
(d) 6.2 Times

Answer

D

Question 20: On the basis of the following information received from a firm, its Total Assets-Debt ratio will be:
(a) 40%
(b) 60%
(c) 30%
(d) 70%

Answer

A

Question 21 :Total revenue from operations Rs.9,00,000; Cash revenue from operations Rs.3,00,000; DebtorsRs.1,00,000; Debtors Rs.1,00,000; B/R Rs.20,000. Trade Receivables Turnover Ratio will be:
(a) 5 Times
(b) 6 Times
(c) 7.5 Times
(d) 9 Times

Answer

A

Question 22: Equity Share Capital Rs.20,00,000; Reserves Rs.5,00,000; Debentures Rs.10,00,000; CurrentLiabilities Rs.8,00,000. Debt-equity ratio will be:
(a) 0.4 : 1
(b) 0.32 : 1
(c) 0.72 : 1
(d) 0.5 : 1

Answer

A

Question 23: Revenue from Operations Rs.2,00,000; Inventory Turnover ratio 5; Gross Profit 25%. Find out thevalue of Closing Inventory, if Closing Inventory is Rs.8,000 more than the Opening Inventory.
(a) Rs.38,000
(b) Rs.22,000
(c) Rs.34,000
(d) Rs.26,000

Answer

C

Question 24: Ratios which throw light on the debt servicing ability of the businesses in the long run are known as
(a) Solvency ratios
(b) Proprietary Ratio
(c) Quick Ratios
(d) None of the options

Answer

Solvency ratios

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Question 25: On the basis of following data, the Debt-Equity Ratio of a Company will be: Equity Share CapitalRs.5,00,000; General Reserve Rs.3,20,000; Preliminary Expenses Rs.20,000; Debentures Rs.3,20,000;Preliminary Expenses Rs.20,000; Debentures Rs.3,20,000; Current Liabilities Rs.80,000.
(a) 1:2
(b) 0.52:1
(c) 0.4:1
(d) 0.37:1

Answer

C

Question 26: Revenue from Operations Rs.6,00,000; Gross Profit 20%; Office Expenses Rs.30,000;SellingExpenses Rs.48,000.Calculate operating ratio.
(a) 80%
(b) 85%
(c) 96.33%
(d) 93%

Answer

D

Question 27: Liquid Assets include :
(a) Debtors
(b) Bills Receivable
(c) Bank Balance
(d) All of the Above

Answer

All of the Above

Question 28: Average payment period 2 months hence creditors turnover will be
(a) 6 Times
(b) 5 Times
(c) 2 Times
(d) None of the options

Answer

6 Times

Question 29: Ratios which are usually calculated in times are
(a) Activity Ratio
(b) Profitability Ratio
(c) Financial Position Ratio
(d) None of the options

Answer

Activity Ratio

Question 30: A Company’s liquid assets are Rs.5,00,000 and its current liabilities are Rs.3,00,000. Thereafter, it paid 1,00,000 to its trade payables. Quick ratio will be:
(a) 1.33 : 1
(b) 2.5 : 1
(c) 1.67:1
(d) 2 : 1

Answer

D

Question 31: The two basic components for the calculation of operating ratio are
(a) Operating cost (cost of goods sold plus operating expenses) and net sales
(b) Operating cost (cost of goods sold plus operating expenses) and Gross sales
(c) Operating cost (cost of goods sold plus operating expenses) and Net Loss
(d) None of the options

Answer

Operating cost (cost of goods sold plus operating expenses) and net sales

Question 32: Which ratio is not a part of Solvency Ratio?
(a) Current Ratio
(b) Debt to Equity Ratio
(c) otal Assets to Debt Ratio
(d) Proprietary Ratio

Answer

Current Ratio

Question 33: Sales ratio may otherwise be called
(a) Turnover
(b) Working Capital
(c) Turnover and Working Capital
(d) None of the options

Answer

Turnover

Question 34: The current ratio explains the relationship between
(a) Current assets and current liabilities
(b) Sundry Debtors and sundry creditors
(c) Current assets and current liabilities and Sundry Debtors and sundry creditors
(d) None of the options

Answer

Current assets and current liabilities

Question 35: Ratio of Net Sales to Net Working Capital is
(a) Working Capital Turnover Ratio
(b) Profitability Ratio
(c) Liquidity Ratio
(d) None of the options

Answer

Working Capital Turnover Ratio

Question 36: Following are Profitability ratios except
(a) Working capital turnover ratio
(b) Gross profit ratio
(c) Net profit ratio
(d) Operating profit ratio

Answer

Working capital turnover ratio

Question 37. If average inventory is Rs.50,000 and closing inventory is Rs.2,000 less than the opening inventory, opening and closing inventory will be :
(a) Rs.52,000 and Rs.50,000
(b) Rs.50,000 and Rs.48,000
(c) Rs.48,000 and Rs.46,000
(d) Rs.51,000 and Rs.49,000

Answer

Rs.51,000 and Rs.49,000

Question 38: Followings are the solvency ratio except
(a) Quick Ratio
(b) Total Assets to Debt Ratio
(c) Debt equity ratio
(d) Proprietary Ratio

Answer

Quick Ratio

Question 39: Operating cost – Operating Expenses = ?
(a) Cost of Revenue from Operations
(b) Gross Profit
(c) Net Profit
(d) Operating Profit

Answer

Cost of Revenue from Operations

Question 40: A high Debt to Equity Ratio means
(a) Firm is depend upon borrowings/debts
(b) Firm has no debts at all
(c) Firm is depend upon Equity only
(d) Firm is free from debts

Answer

Firm is depend upon borrowings/debts

Question 41. Current Assets Rs.4,00,000; Current Liabilities Rs.2,00,000 and Inventory is Rs.50,000. Liquid Ratio will be :
(a) 2 : 1
(b) 2.25 : 1
(c) 4 : 7
(d) 1.75 : 1

Answer

1.75 : 1

Question 42. Revenue from Operations Rs.2,00,000; Inventory Turnover Ratio 5; Gross Profit 25%. Find out the value of Closing Inventory, if Closing Inventory is Rs.8,000 more than the Opening Inventory.
(a) Rs. 3 8,000
(b) Rs.22,000
(c) Rs.34,000
(d) Rs.26,000

Answer

Rs.34,000

Question 43. Name the aggregate of Shareholders’ Funds and Total Debts:
(a) Total Debts
(b) Capital Employed
(c) Total Assets
(d) Non-current Assets

Answer

Total Assets

Question 44: Debt-equity ratio is a sub-part of
(a) Long-term solvency ratio
(b) Debtors turnover ratio
(c) Short-term solvency ratio
(d) None of the options

Answer

Long-term solvency ratio

Question 45. Credit revenue from operations Rs.3,00,000. Trade Receivables Turnover Ratio 5; Calculate Closing Debtors, if closing debtors are two times in comparison to Opening DebtoRs.
(a) Rs.40,000
(b) Rs. 60,000
(c) Rs. 80,000
(d) Rs. 1,20,000

Answer

Rs. 80,000

Question 46: Ratio Analysis helpful in
(a) Comparative analysis of the performance and Budgeting and forecasting
(b) Comparative analysis of the performance
(c) Budgeting and forecasting
(d) None of the options

Answer

Comparative analysis of the performance and Budgeting and forecasting

Question 47: Which Items Included in Current Assets for get the current ratio
(a) All of the options
(b) Current investments
(c) Current Stock
(d) Trade receivables (bills receivable and sundry debtors less provision for doubtful debts)

Answer

All of the options

Question 48. A Company’s Current Ratio is 3 : 1; Current Liabilities are Rs.2,50,000; Inventory is Rs.60,000 and Prepaid Expenses are Rs. 5,000. Its Liquid Assets will be :
(a) Rs.6,90,000
(b) Rs.6,95,000
(c) Rs.6,85,000
(d) Rs.8,15,000

Answer

Rs.6,85,000

True or False:

Question 1: Current ratio improves with increase in sales at profir.

Answer

True

Question 2: Solvency refers to the ability of the enterprise to meet its current obligations.

Answer

True

Question 3: Lower the Gross Profit Ratio, higher will be the profitability of a company.

Answer

False

Fill in the blanks

Question 1: An ideal Quick Ratio is …………….

Answer

1:1

Question 2:……………is the process of determining and interpreting numerical relationship between figures of the financial statements.

Answer

Ratio Analysis

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### Frequently Asked Question (FAQs)

How many MCQ questions are there in Class 12 chapter 5 Accountancy?

In Class 12 chapter 5 Accountancy, we have provided 48 Important MCQ Questions, But in the future, we will add more MCQs so that you can get good marks in the Class 12 exam.

Can we score good marks in Class 12 Accountancy with the help of Accounting Ratios MCQ Questions?

Yes, MCQ Question is one of the best strategies to make your preparation better for the CBSE Board Exam. It also helps to know the student’s basic understanding of each chapter. So, You can score good marks in the Class 12 Accountancy exam.