Page 143 - DMGT403_ACCOUNTING_FOR_MANAGERS

Accounting for Managers

Notes 10. Super quick assets do not include
(a) Closing stock (b) Prepaid expenses
(c) Sundry debtors (d) Both (a) & (b)
11. Standard norm of the Debt to Capital

(a) 1:2 (b) 1:1
(c) 2:1 (d) 1:5
12. The term accounting is used to describe relationships significantly which exist in between
figures shown in a
(a) Balance sheet (b) Profit & Loss A/c
(c) Trading A/c (d) All of these
13. Which of the following is not a purpose of the Ratio Analysis?

(a) To study the liquidity of the firm
(b) To study the leverage position of the firm
(c) To interpret the profit earning capacity of the firm
(d) To identify the turnover of the firm

14. Ratio analysis is an outcome of analysis of historical transactions known as
(a) Premortem Analysis (b) Postmortem Analysis
(c) Antimortem Anlaysis (d) Mortem Analysis
15. Which of the following is not a ratio account on the basis of Financial Statements?

(a) Income Statement Ratios (b) Positional Statement Ratios
(c) Composite Mixture of Ratios (d) None of these
16. Which of the following is not a short-term solvency ratio?
(a) Current Assets Ratio (b) Defensive Interval Ratio

(c) Super Quick Assets Ratio (d) None of these

6.8 Review Questions

1. State the different types of financial statement analysis.
2. Is the firm satisfies the standard norm of the current asset ratio and liquid assets ratio?

M/s Shanmuga & Co
Balance sheet as on dated 31st March, 2010

Liabilities Assets
Share capital 42,000 Fixed Assets Net 34,000
Reserve 3,000 Stock 12,400
Annual Profit 5,000 Debtors 6,400
Bank overdraft 4,000 Cash 13,200
Sundry creditors 12,000
66,000 66,000

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