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QUESTIONS
1. Give three examples of each of the following:
a) Current Liabilities
b) Contingent Liabilities
c) Current Assets
d) Miscellaneous Expenditure
e) Provisions
2. Under which heading and sub-heading will you show the following items:
a) Shares Forfeited account
b) Securities Premium
c) Unclaimed Dividend
d) Proposed Dividend
e) Arrears of fixed cumulative dividend on preference shares
3. Give the headings and sub-headings under which the following will be shown in a
company’s Balance Sheet as per Schedules of the Companies Act, 2013:
(i) 10% Debentures
(ii) Preliminary Expenses
(iii) Plant & Machinery
(iv) Capital Reserve
(v) Bills Payable
(vi) General Reserve
(vii) Interest paid out of capital during construction
(viii) Railway sidings
(ix) Stores & Spare parts
(x) Fixed Deposits
4. Calculate Current Ratio and Quick Ratio from the following information:
i. Stock ₹ 60,000
ii. Advance tax ₹ 4,000
iii. Cash ₹ 40,000

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 iv. Bank Overdraft ₹ 4,000
v. Debtors ₹ 40,000
vi. Debentures ₹ 2,00,000
vii. Creditors ₹ 50,000
viii. Accrued Interest ₹ 4,000
ix. Bills Receivable ₹ 20,000
x. Bills Payable ₹ 30,000
5. Current Assets of a company are ₹ 10,00,000 and Current Liabilities are ₹ 6,00,000. The
management is interested in making the ratio 2:1 by making payment of certain current
liabilities. Advise the company management as to how much of current liabilities should
be paid to attain the desired ratio.
6. Hari Ltd., has a current ratio of 3.5:1 and quick ratio is 2:1. If excess of current assets
over quick assets represented by stock is ₹ 1,50,000. Calculate Current Assets and
Current Liabilities.
7. Calculate Debt Equity, from the following information:
10,000 Preference Shares of ₹ 10/- each ₹ 1,00,000
5,000 Equity shares of ₹ 20 each ₹ 1,00,000
Creditors ₹ 45,000
Debentures ₹ 2,20,000
Profit & Loss (cr.) ₹ 70,000
8. Calculate Debt Equity Ratio from the following information:
Total Debts ₹ 3,00,000; Total Assets ₹ 5,40,000; Current Liabilities ₹ 70,000.

9. Shareholders’ Funds ₹ 80,000; Total debts ₹ 1,60,000; Current Liabilities ₹ 20,000.

Calculate Total assets to debt ratio.
10. From the following Balance Sheet of a company, calculate Debt Equity ratio, Total Assets
to Debt Ratio and Proprietary Ratio

11. The accountant of Moon Ltd. has reported the following data:
Gross Profit ₹ 60,000
Gross Profit Margin 20%
Total Assets Turnover 0.30:1
Net worth to Total Assets 0.90:1

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 Current Ratio 1.5:1
Liquid assets to Current Liability 1:1
Credit Sales to Total Sales 0.80:1
Average Collection Period 60 days
Assume 360 days in a year and prepare Balance Sheet.

12. Following is the information of XML Ltd., related to the year ended 31st March, 2018:
Gross Profit 20% of sales
Net Profit 10% of sales
Inventory Holding Period 3 months
Receivable Collection Period 3 months
Non-current Assets to Sales 1:4
Non-current Assets to Current Assets 1:2
Current ratio 2:1
Non-current Liabilities to Current Liabilities 1:1
Share Capital to Reserves & Surplus 4:1
Non-current Assets as on 31st March, 2017 assume that: ₹ 50,00,000
i. No change in Non-current Assets during the year 2017-18
ii. No depreciation charged on Non-current Assets during the year 2017-18
iii. Ignore Tax
iv. Calculate COGS, NP, Inventory, Receivables and cash for the year ended 31st
March, 2018
13. Following figures and ratios are related to a company Q Ltd.:
i. Sales for the year – all credit ₹ 30,00,000
ii. GP Ratio 25%
iii. Fixed Assets Turnover (based on COGS) 1.5
iv. Stock Turnover (based on COGS) 6
v. Liquid ratio 1:1
vi. Current ratio 1.5:1
vii. Receivables (Debtors) collection period 2 months
viii. Reserves and Surplus to Share Capital 0.6: 1
ix. Capital Gearing Ratio 0.5
x. Fixed Assets to Net Worth 1.20:1
Calculate Closing Stock, Fixed Assets, Current Assets, Debtors and Net Worth.

14. Following information is given of Mukesh Enterprises, rewrite Balance Sheet:

i. Current Ratio 2:1
ii. Acid Test Ratio 3:2
iii. Reserves & Surplus 20% of Equity Share Capital
iv. Long-term Debt 45% of net worth
v. Stock Turnover Velocity =1.5 months
vi. Receivables Turnover Velocity = 2 months
vii. You may assume Closing Receivables as Average Receivables

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viii. GP Ratio = 20%
ix. Sales is ₹ 21,00,000 (25% sales are on cash basis and balance on credit basis)
x. Closing Stock is ₹ 40,000 more than opening stock
xi. Accumulated Depreciation is 1/6th of original coat of Fixed Assets
xii. Balance Sheet is as follows
LIABILITIES ₹ ASEETS ₹
Equity Share Capital ? Fixed Assets (Cost) ?
Reserves & Surplus ? Less: Accumulated ?
Depreciation
Long-term Loans 6,75,000 Fixed Assets (WDV) ?
Bank Overdraft 60,000 Stock ?
Creditors ? Debtors ?
Cash ?
TOTAL ? TOTAL ?

15. Following information of ASD Ltd., relate to the year ended 31st march, 2022:
i. NP 8% of sales
ii. Raw Material consumed 20% of COGS
iii. Direct wages 10% of COGS
iv. Stock of Raw Material 3 months usage
v. Stock of Finished Goods 6% of COGS
vi. GP 15% of sales
vii. Debt Collection period 2 months
viii. All sales are on credit
ix. Current Ratio 2:1
x. Fixed Assets to Current Assets 13:11
xi. Fixed Assets to Sales 1:3
xii. Long-term Loans to Current Liabilities 2:1
xiii. Capital to Reserves & surplus 1:4
Prepare Income Statement as:
Particulars ₹ Particulars ₹
To Direct Materials consumed ? By Sales ?
To Direct Wages ?
To Works Overheads ?
To Gross Profit c/d ?
TOTAL ? TOTAL ?
To Selling & Distr. Expenses ? By GP b/d ?
To NP ?
TOTAL ? TOTAL ?
Balance Sheet
LIABILITIES ₹ ASEETS ₹
Share Capital ? Fixed Assets ?

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 Reserves & Surplus ? Current Assets:
Long-term Loans ? Stock of Rm ?
Current Liabilities ? Stock of FG ?
Debtors ?
Cash ?
TOTAL ? TOTAL ?

16. Given below are the estimations for the next year by Niti Ltd.:
Particulars ₹ in crores
Fixed Assets 5.20
Current Liabilities 4.68
Current Assets 7.80
Sales 23.00
EBIT 2.30
The company will issue equity funds of ₹ 5 crores in the next year. It is also considering
the debt alternatives of ₹3.32 crores for financing the assets. The company wants to adopt
one of the policies given below:
Financing Policy Short-term debt @ Long-term debt @ Total
12% 16%
Conservative 1.08 2.24 3.32
Moderate 2.00 1.32 3.32
Aggressive 3.00 0.32 3.32
Assuming corporate tax rate @ 30%, calculate the following for each of the financing
policy:
a) Return on Total Assets
b) Return on Owner’s equity
c) Net Working Capital
d) Current Ratio
Also advise which Financing policy should be adopted if the company wants high returns.

17. Assuming the current ratio of a company is 2, state in each of the following cases
whether the ratio will improve or decline or will have no change:
a) Payment of Current Liability
b) Purchase of Fixed Assets by cash
c) Cash collected from customers
d) Bills Receivable dishonoured
e) Issue of new shares
18. Following figures are available in the books of Tirupati Ltd.:
i. Fixed Assets Turnover ratio 8 times
ii. Capital Turnover Ratio 2 times
iii. Inventory Turnover ratio 8 times

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 iv. Receivable Turnover Ratio 4 times
v. Payable Turnover Ratio 6 times
vi. GP Ratio 25%
vii. GP was ₹ 8,00,000.
viii. There is no long-term loan or overdraft.
ix. Reserves & surplus amount to ₹ 2,00,000.
x. Ending Inventory of the year is ₹ 20,000 above the beginning inventory.
Calculate various assets and liabilities and prepare Balance Sheet.
19. Following information relates to Temer Ltd.:
Debtors Velocity 3 months
Creditors Velocity 2 months
Stock turnover ratio 1.5
GP ratio 25%
Bills Receivables ₹ 25,000
Bills Payable ₹ 10,000
GP ₹ 4,00,000
Fixed Assets Turnover Ratio 4
Closing Stock of the period is ₹ 10,000 above the opening stock. Determine:
a) Sales
b) COGS
c) Sundry Debtors
d) Sundry Creditors
e) Closing Stock
f) Fixed Assets
20. Gig Ltd., has the following information relating to the year ended 31st March, 2020 and
31st March, 2021:
31st March, 2020 31st March, 2021
Share Capital 40,00,000 40,00,000
Reserves & Surplus 20,00,000 25,00,000
Long-term Loan 30,00,000 30,00,000
a) NP ratio 8%
b) GP ratio 20%
c) Long-term loan has been used to finance 40% of the fixed assets
d) Stock Turnover with respect to COGS is 4
e) Debtors represent 90 days sales
f) Company holds cash equivalent to 1.5 months COGS
g) Ignore tax and assume 360 days in a year.
Prepare Balance Sheet as on 31st March, 2021:
LIABILITIES ₹ ASSETS ₹
Share Capital Fixed Assets
Reserves & Sundry Debtors
Surplus

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Long-term loan Closing Stock
Sundry Creditors Cash in hand
TOTAL TOTAL

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