Question 134 Chapter 4 of +2-B – T.S. Grewal 12 Class

Question 134 Chapter 4 of +2-B

Question 134 Chapter 4 of +2-B

Return on Capital Employed (or Return on Investment) Ratio

134. State with reason whether the following transactions will increase,
decrease or not change the ‘Return on Investment’ Ratio:
(i) Purchase of machinery worth 10,00,000 by issue of equity shares.
(ii) Charging depreciation of 25,000 on machinery.
(iii) Redemption of debentures by cheque 2,00,000.
(iv) Conversion of 9% Debentures of 1,00,000 into equity shares.

 

 

The solution of Question 134 Chapter 4 of +2-B: –

 

Transactions
Impact on Return on Investment Ratio Reason
     
(i) Purchase of machinery worth 10,00,000 by issue of equity shares. Decrease The amount of Capital Employed is increase and no change in Net Profit.
     
(ii) Charging depreciation of 25,000 on machinery. Decrease There will be decrease in both Capital Employed and Net Profit.
     
(iii) Redemption of debentures by cheque 2,00,000. Increase There will be decrease in Capital Employed and Net Profit is Not Changed.
     
(iv) Conversion of 9% Debentures of 1,00,000 into equity shares. No Change The amount of Share Capital is Increase equally to Decrease in Debentures So There is no Change in the Amounts.

 

 

Balance Sheet: Meaning, Format & Examples

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Also, Check out the solved question of previous Chapters: –

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication

2 Book 3 min 225x300 - Question 134 Chapter 4 of +2-B  - T.S. Grewal 12 Class
T.S. Grewal’s Analysis of Financial Statements

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