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Accountancy · 2023 · 4 marks
CBSE 2023 · Region 4 · Set 1 · Q33
(a) Y Ltd. has a Current Ratio of 3 5: 1 and Quick Ratio of 2: 1. If excess of current assets over quick assets represented by inventory is ₹ 48,000,…
(a)
Y Ltd. has a Current Ratio of $\displaystyle 3$ $\displaystyle 5$ : $\displaystyle 1$ and Quick Ratio of $\displaystyle 2$ : 1. If excess of current assets over quick assets represented by inventory is ₹ $\displaystyle 48,000$, calculate current assets and current liabilities. (b) Calculate Debt to Equity Ratio : Shareholder Funds ₹ $\displaystyle 2,00,000$ Reserves and Surplus ₹ $\displaystyle 1,00,000$ Total Debt ₹ $\displaystyle 4,00,000$ Current Liabilities ₹ $\displaystyle 1,00,000$
The Current Ratio of a company is $\displaystyle 2$ : 1. State giving reasons which of the following transactions would improve, reduce or not change the ratio : (a) Purchase of goods for cash ₹ $\displaystyle 60,000$ (b) Purchase of fixed assets for cash ₹ $\displaystyle 2,00,000$ (c) Sale of goods costing ₹ $\displaystyle 20,000$ for ₹ $\displaystyle 23,000$ on credit (d) Issue of shares ₹ $\displaystyle 10,00,000$
Marking-scheme solution
Current Ratio= Current Assets/ Current Liabilities
Current Ratio= $\displaystyle 3.5$:$\displaystyle 1$
Current Assets/ Current Liabilities= $\displaystyle 3.5$:$\displaystyle 1$
Current Assets(CA)= $\displaystyle 3.5$ Current Liabilities(CL)
Quick Ratio= Quick Assets/ Current Liabilities
Quick Ratio = $\displaystyle 2$:$\displaystyle 1$
Quick Assets/ Current Liabilities= $\displaystyle 2$:$\displaystyle 1$
Quick Assets(QA) = $\displaystyle 2$ Current Liabilities(CL)
Inventory= CA- QA
$\displaystyle 48,000$= $\displaystyle 3.5$ CL- $\displaystyle 2$ CL
$\displaystyle 48,000$= $\displaystyle 1.5$ CL
Current Liabilities (CL)= ₹$\displaystyle 32000$
Current Assets(CA)= 3.5x $\displaystyle 32000$= ₹$\displaystyle 1,12,000$
Q. (i)(b)Calculate Debt to Equity Ratio..............................................
Ans.
Debt Equity Ratio= Debt/ Equity
Debt= Total Debt- Current Liabilities= $\displaystyle 4,00,000$-$\displaystyle 1,00,000$= $\displaystyle 3,00,000$
Equity= Shareholder’s funds= $\displaystyle 2,00,000$
Debt Equity Ratio= $\displaystyle 3,00,000$/ $\displaystyle 2,00,000$= $\displaystyle 1.5$:$\displaystyle 1$
Q. (ii)The Current ratio of a company........................................................
Ans.
S. No. Effect on Ratio Reason
a No change No change in both current assets and current liabilities.
b Decline Current assets decrease with no change in current liabilities.
c Improve Current assets increase with no change in current liabilities
d Improve Current assets increase with no change in current liabilities
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CBSE Class 12 Accountancy past-paper question from the 2023 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.