12th Class Accountancy Accounting Ratios Question Bank

done Assertion and Reason - Accounting Ratios Total Questions - 6

• question_answer1)

  Assertion [A] :

  While calculating the Current Ratio, Loose Tools and Stores & Spares are not included in the current asset.

  Reason [R]:

  Loose Tools and Stores & Spares are not held for sale or conversion into cash.

  Choose the Correct Option from the following:

  A)
  Assertion and Reason both are correct and Reason is the correct explanation of assertion done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Only Assertion is correct. done clear
  D)
  Reason is correct but Assertion is not correct done clear
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• question_answer2)

  Assertion [A] :

  If Current Ratio is 2 : 1. Current maturity of long-term debts i.e. Redemption of debentures in the current year, will increase the Current Ratio.

  Reason [R]:

  Current assets will decrease and there is no impact on current liabilities.

  Choose the Correct Option from the following:

  A)
  Assertion and Reason both are correct and Reason is the correct explanation of assertion done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Only Assertion is correct done clear
  D)
  Reason is correct but Assertion is not correct done clear
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• question_answer3)

  Assertion [A] :

  If Current Ratio of a company is 1:1. Its Net working capital will be Zero.

  Reason [R]:

  When Net Working Capital is Zero, it will reduce the Current Ratio of the Company.

  Choose the Correct Option from the following:

  A)
  Assertion and Reason both are correct and Reason is the correct explanation of assertion done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Only Assertion is correct done clear
  D)
  Reason is correct but Assertion is not correct done clear
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• question_answer4)

  Assertion [A] :

  Debt Equity Ratio of Vinod Ltd. is 2:1. If a Machinery is purchased by the company by issuing 2,00,000 Equity Shares to the Vendors of Machinery, Debt Equity will Decrease.

  Reason [R] :

  No Change in Debt but Equity is increased.

  Choose the Correct Option from the following:

  A)
  Assertion and Reason both are correct and Reason is the correct explanation of assertion done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Only Assertion is correct done clear
  D)
  Only Reason is correct done clear
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• question_answer5)

  Assertion [A] :

  Goods sold for Cash at cost price, will not increase the Gross Profit Ratio.

  Reason [R] :

  Revenue from operation will increase but closing inventory will decrease with the same amount.

  Choose the Correct Option from the following:

  A)
  Assertion and Reason both are correct and Reason is the correct explanation of assertion done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Only Assertion is correct done clear
  D)
  Only Reason is correct done clear
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• question_answer6)

  Assertion [A] :

  If a company has ideal Current Ratio and it further purchased goods on credit, the Current Ratio will decrease.

  Reason [R] :

  The Ideal Current Ratio of the company is 2:1.

  Choose the Correct Option from the following:

  A)
  Assertion and Reason both are correct and Reason is the correct explanation of assertion done clear
  B)
  Assertion and Reason both are correct but Reason is not correct explanation of assertion done clear
  C)
  Only Assertion is correct done clear
  D)
  Only Reason is correct done clear
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