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Question 57 Chapter 4 of +2-B – T.S. Grewal 12 Class

Question 57 Chapter 4 of +2-B
Question No. 57- Chapter No.4 - T.S. Grewal +2 Book Part B

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Question 57 Chapter 4 of +2-B

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57. State with reason, whether the Proprietary Ratio will improve, the decline will not change because of the following transactions if the proprietary ratio is 0.8: 1.

  1. Obtained a loan of Rs. 5,00,000 from State bank of India payable after five years.
  2. Purchased machinery of Rs. 2,00,000 by cheque.
  3. Redeemed 7% Redeemable Preference Shares Rs. 3,00,000.
  4. Issued equity shares to the vendor of building purchased for Rs. 7,00,000.
  5. Redeemed 10% Redeemable debentures of Rs. 6,00,000.

The solution of Question 57 Chapter 4 of +2-B: – 

   
Transactions
Impact on Proprietary Ratio Reason
(i) Obtained a loan of Rs. 5,00,000 from State bank of India payable after five years. DeclineThe amount of Shareholders’ Fund is not changes and Total Assets Increased.
(ii) Purchased machinery of Rs. 2,00,000 by cheque. No changeThere will be no Change in Total Assets and Shareholders’ Funds because of Machinery account increased due to Decreased in Bank account.

(iii) Redeemed 7% Redeemable Preference Shares Rs. 3,00,000.

 

 DeclineIn Total Assets, Cash or bank account will be decreased and in Shareholders’ Funds, Share capital will be decreased.
(iv) Issued equity shares to the vendor of
building purchased for Rs. 7,00,000.
 ImproveShareholders’ Funds and Total Assets of the Company both is Increased.
(v) Redeemed 10% Redeemable debentures of Rs. 6,00,000. ImproveThe amount of total assets is decreased, but no change in Shareholders’ funds.
    

 


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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 2-min

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