Question 41 Chapter 4 of +2-B – T.S. Grewal 12 Class

Question 41 Chapter 4 of +2-B

Question 41 Chapter 4 of +2-B

41. Debt to Equity Ratio of a company is 0.5: 1. Which of the following
suggestions would increase, decrease or not change it:

  1. Issue of Equity Shares;
  2. Cash Received from debtors;
  3. Redemption of debentures
  4. 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)

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 41 Chapter 4 of +2-B  - T.S. Grewal 12 Class
T.S. Grewal’s Analysis of Financial Statements

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