Accounting - Questions and Answers for Competitive Exams | GkSeries

25. Which ratio is calculated to ascertain the efficiency of inventory management in terms of capital investment?

• [A] stock velocity ratio
• [B] debtors velocity ratio
• [C] creditors velocity ratio
• [D] working capital turnover ratio

Answer: Option [A]

26. Which ratio measures the number of times the receivables are rotated in a year in terms of sales?

• [A] stock turnover ratio
• [B] debtors turnover ratio
• [C] creditors velocity ratio
• [D] working capital turnover ratio

Answer: Option [B]

27. Current assets - current liabilities =

• [A] fixed capital
• [B] working capital
• [C] opening capital
• [D] closing capital

Answer: Option [B]

28. The ratio establishes the relationship between fixed assets and long-terms funds is

• [A] current ratio
• [B] fixed assets ratio
• [C] fixed assets turnover ratio
• [D] debt equity ratio

Answer: Option [B]

29. A high capital gearing ratio indicates

• [A] under capitalization
• [B] over capitalization
• [C] borrowed capital
• [D] long term funds

Answer: Option [A]

30. Low turnover of stock ratio indicates

• [A] solvency position
• [B] monopoly situation
• [C] overinvestment in inventory
• [D] liquidity position

Answer: Option [C]

31. All those assets which are converted into cash in the normal course of business within one year are known as

• [A] fixed assets
• [B] current assets
• [C] fictitious assets
• [D] wasting assets

Answer: Option [B]

32. Any transaction between a current account and another current account does not affect

• [A] profit
• [B] funds
• [C] working capital
• [D] capital

Answer: Option [B]

33. Decrease in current asset

• [A] increases working capital
• [B] decreases working capital
• [C] decrease fixed capital
• [D] increase fixed capital

Answer: Option [B]

34. Decrease in current liability

• [A] increases working capital
• [B] decreases working capital
• [C] decreases fixed capital
• [D] ncreases fixed capital

Answer: Option [A]

35. Profit on sale of fixed assets is

• [A] non trading income
• [B] operating income
• [C] non trading gains
• [D] long term gain

Answer: Option [C]

36. In funds flow statement, funds from operations is

• [A] application of fund
• [B] source of cash
• [C] application of cash
• [D] source of fund

Answer: Option [D]