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Question 28 Chapter 4 of +2-B
II. Solvency (Long-Term) Ratio
28. (Effect of Transactions on DE Ratio) The Debt Equity Ratio of a company is 1 : 2. Which of the following suggestion would (i) increase, (ii) decrease and (iii) not change it.
(a) Issue of equity shares, (b) Cash received from debtors, (c) Redemption of Debenture for cash,(d) Purchased goods on credit, (e) Redemption of debentures by conversion into shares, (f) Issue of shares against the purchase of fixed assets, (g) Issue of debentures against the purchase of a fixed asset.
| Transactions |
Effect of Debt Equity Ratio | |
|---|---|---|
| (a) Issue of equity shares | Decrease | |
| (b) Cash received from debtors | No Effect | |
| (c) Redemption of Debenture for cash | Decrease | |
| (d) Purchased goo ds on credit | No Effect | |
| (e) Redemption of debentures by conversion into shares | Decrease | |
| (f) Issue of shares against the purchase of fixed assets | Decrease | |
| (g) Issue of debentures against the purchase of a fixed asset | Increase | |
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "Question 28 Chapter 4 of +2-B - USHA Publication 12 Class", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to USHA Publication Part 2 volume I.
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