Question 41 Chapter 4 of +2-B
Table of Contents
41. Debt to Equity Ratio of a company is 0.5: 1. Which of the following
suggestions would increase, decrease or not change it:
- Issue of Equity Shares;
- Cash Received from debtors;
- Redemption of debentures
- Purchased goods on credit?
The solution of Question 41 Chapter 4 of +2-B: –
| Transactions |
Impact on Debt to Equity Ratio | Reason |
|
| (i) Issue of Equity Shares | Decrease | The amount of Shareholders’ Fund is Increase and no change in Debts of Company. | |
| (ii) Cash Received from debtors. | No change | Cash (Current Assets) is increases and Debtors (current Assets) ais decreases. There is no any effect on Equity and Debts of Company. | |
| (iii) Redemption of debentures | Decrease | Long-term Debts are decreases in form of Long-term Loans and No effect on Equity of Company. | |
| (iv) Purchased goods on credit | No change | Debts and Equity of Company not Changed. This effect on the Assets of Company. | |
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)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
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