Question 1

Question 01 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 01 Chapter 4 of +2-B
I. Liquidity Ratios
1. (Current Ratio) From the following calculate the current ratio.
Balance Sheet of XYZ Company LTD. As of 31st March 2018

Particular
₹

I. Equity and Liabilities

Shareholders’ Funds

Share Capital
21,000

Reserve and Surplus

surplus in Statement of Profit and Loss
2,500

Reserves
1,500

Current Liabilities

Short-term Borrowings :

Bank Overdraft
2,000

Trade Payable
6,000

33,000

II. Assets

Non-Current Asset

Question 2

Question 02 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 02 Chapter 4 of +2-B
I. Liquidity Ratios
2. (Current Ratio From Total Assets & Total Liabilities) Calculate the current ratio from the following information.

Particular
₹
Particular
₹

Total Assets
2,50,000
Long term Liabilities 
50,000

Fixed Assets
1,00,000
Investment 
1,00,000

Shareholders Fund
1,75,000

The solution of Question 02 Chapter 4 of +2-B: -

Total Assets
=
Fixed Assets + Investment + Current Assets

₹ 2,50,000
=
₹ 1,00,000 + ₹ 1,00,000 + Current

Question 3

Question 03 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 03 Chapter 4 of +2-B
I. Liquidity Ratios
3. (Current Ratio) Find out current ratio.Trade Receivable ₹ 33,000; Provision for Bad Debts ₹ 3,000 ; Stock twice of net Debtors ; Cash in hand ₹ 16,000 ; Advance to suppliers ₹ 15,000 ; Trade Payable ₹ 35,000 ; Outstanding expenses ₹ 15,000 ; Prepaid expenses ₹ 5,000 Investment (Long term) ₹ 12,000.
The solution of Question 03 Chapter 4 of +2-B: -

Current Assets
=
Trade Receivable + Stock + Cash Advance to suppliers + Prepaid expenses

Question 4

Question 04 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 04 Chapter 4 of +2-B
I. Liquidity Ratios
4. (Current Ratio) Calculate current ratio.

₹

Cash in hand
8,000

Inventories
9,000

Sundry Debtors
11,000

Loose Tools
15,000

Computer
30,000

Bills Receivable
6,000

Trade Payable
7,000

Overdraft
10,000

The solution of Question 04 Chapter 4 of +2-B: -

Current Assets
=
Cash in hand + Inventories + Sundry Debtors + Bills Receivable

=
₹ 8,000 + ₹ 9,000 + ₹ 11,000 + ₹ 6,000

Current Assets
=
₹ 34,000

Current L

Question 5

Question 05 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 05 Chapter 4 of +2-B
I. Liquidity Ratios
5. (Current Ratio when Capital Employed is given)

Total Assets
₹ 6,00,000

Fixed Assets
₹ 3,00,000

Capital employed
₹ 4,50,000

The solution of Question 05 Chapter 4 of +2-B: -

Current Assets
=
Total Assets – Fixed Assets

=
₹ 6,00,000 - ₹ 3,00,000

Current Assets
=
₹ 3,00,000

Current Liabilities
=
Trade Payable + Overdraft

=
₹ 6,00,000- ₹ 4,50,000

Current Liabilities
=
₹ 1,50,000

Current Ratio=
Current As

Question 6

Question 06 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 06 Chapter 4 of +2-B
I. Liquidity Ratios
6. (Current Assets & Current Liabilities/Current Ratio given) Current ration of a company is 3:1 and working capital is ₹ 1,00,000. Calculate of current assets and current liabilities.
The solution of Question 06 Chapter 4 of +2-B: -

Working Capital
=
Current Assets – Current Liabilities

1,00,000
=
3 - 1

2*
=
₹ 1,00,000

Current Assets
=
₹ 1,00,000
X
3

2

=
₹ 1,50,000

Current Liabilities
=
₹ 1,00,000
X
1

2

Question 7

Question 07 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 07 Chapter 4 of +2-B
I. Liquidity Ratios
7. (Current Ratio/W.C. given) Current Assets ₹ 20,00,000Inventory ₹ 8,00,000Working Capital ₹ 13,00,000Calculate the current ratio
The solution of Question 07 Chapter 4 of +2-B: -

Current Assets
=
₹ 20,00,000

Working Capital
=
Working Capital

Current Liabilities
=
Current Assets – Working Capital

=
₹ 20,00,000 - ₹ 13,00,000

Current Assets
=
₹ 7,00,000

Current Ratio=
Current Assets

Current Liabilities

Current Rat

Question 8

Question 08 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 08 Chapter 4 of +2-B
I. Liquidity Ratios
8. (Current Liabilities/C.R. given) Find out Current Liabilities when the current ratio is 2:1 and current assets are ₹ 1,00,000.
The solution of Question 08 Chapter 4 of +2-B: -

Current Assets
=
₹ 1,00,000

Current Ratio
=
2: 1

Current Ratio=
Current Assets

Current Liabilities

2
=
₹ 1,00,000

Current Liabilities

Current Liabilities
=
₹ 1,00,000

2

=
₹ 50,000

https://tutorstips.com/what-are-liqui

Question 9

Question 09 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 09 Chapter 4 of +2-B
I. Liquidity Ratios
9. (Current Liabilities ) Current ratio is 2:1 current assets ₹ 1,00,000Find out current Liabilities.
The solution of Question 09 Chapter 4 of +2-B: -

Current Assets
=
₹ 1,00,000

Current Ratio
=
2: 1

Current Ratio=
Current Assets

Current Liabilities

2
=
₹ 1,00,000

Current Liabilities

Current Liabilities
=
₹ 1,00,000

2

=
₹ 50,000

https://tutorstips.com/what-are-liquidity-ratios-formulas-and-exa

Question 10

Question 10 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 10 Chapter 4 of +2-B
I. Liquidity Ratios
10. (Current Ratio & Quick Ratio ) From the following, compute the current ratio and quick ratio.Trade receivable ₹ 2,00,000 ; Prepaid expenses ₹ 20,000 ; Cash ₹ 60,000 ; Marketable securities ₹ 40,000 ; Machinery ₹ 10,000 ; Expenses payable ₹ 80,000 ; Trade payable ₹ 1,20,000 ; Debentures ₹ 4,00,000 ; Inventories ₹ 80,000.
The solution of Question 10 Chapter 4 of +2-B: -

Current Assets
=
Trade receivables + Prepaid expenses + Cash + M

Question 11

Question 11 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 11 Chapter 4 of +2-B
I. Liquidity Ratios
11. (Short Term Financial Position) Following is the balance sheet of Crescent Chemical Works Limited as of 31st March 2018
Balance Sheet

Particular
Note No.
₹

I. Equity and Liabilities

Shareholders’ Funds

6% Preference Share Capital: Issued and Paid-up
 
15,000

Equity Share Capital: Issued and Paid-up
 
55,000

Reserves and Surplus

General Reserve
 
25,000

Reserves for Contingencies
 
10,000

Non-Current Liabilitie

Question 12

Question 12 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 12 Chapter 4 of +2-B
I. Liquidity Ratios
12. (Current Ratio & Quick Ratio & Conclusion) Following is the balance sheet of XYZ Ltd. As of 31st March 2018.

Balance Sheet

Particular
Note No.
₹

I. Equity and Liabilities

Shareholders’ Funds

Equity Share Capital 
 
24,000

2,400 shares of ₹10 each fully paid up

Reserves and Surplus

Statement of Profit and Loss
 
6,000

Non-Current Liabilities

Long-term Borrowing :

10% Debentures
 
15,

Question 13

Question 13 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 13 Chapter 4 of +2-B
I. Liquidity Ratios
13. (Current Ratio & Acid Test Ratio given )GivenThe current ratio of 2: 1Acid Test ratio of 0.5: 1Current Liabilities ₹ 2,00,000Find outCurrent assetsQuick assetsInventories
The solution of Question 13 Chapter 4 of +2-B: - 
Solution: - (a)

Current Ratio
=
2 : 1

Current Liabilities
=
2,00,000

Current Assets
=
Current Liabilities x 2

=
₹ 2,00,000 x 2

=
₹ 4,00,000

Solution: - (b)

Quick Ratio
=
0.5 : 1

Current Liabiliti

Question 14

Question 14 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 14 Chapter 4 of +2-B
I. Liquidity Ratios
14. (Current Ratio & Acid Test Ratio given )Current Assets ₹ 3,00,000Current ratio 3 : 1Liquid ratio 2 : 1Calculate Current assets, Liquid assets and Inventories
The solution of Question 14 Chapter 4 of +2-B: - 
Solution: - (a)

Current Ratio
=
3 : 1

Current Liabilities
=
3,00,000

Current Assets
=
₹ 3,00,000

3

=
₹ 1,00,000

Solution: - (b)

Liquid Ratio
=
2 : 1

Current Liabilities
=
₹ 1,00,000 (Calculated above)

Quick

Question 15

Question 15 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 15 Chapter 4 of +2-B
I. Liquidity Ratios
15. (Current Ratio & Quick Ratio given ) A Ltd. has a current ratio of 3.5 : 1 and acid test ratio of 2 : 1. If the inventory is ₹ 30,000, find out its total current assets and total current liabilities.
The solution of Question 15 Chapter 4 of +2-B: - 
Solution: - (a)

Current Ratio
=
3.5 : 1

Acid Test Ratio
=
2 : 1

Inventories
=
Current Assets –Quick Assets

=
3.5 - 2

₹ 30,000
=
1.5

Current Assets
=
30,000
X 
3.5

1.5

Question 16

Question 16 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 16 Chapter 4 of +2-B
I. Liquidity Ratios
16. (Quick Ratio given ) Quick ratio 1.5, Current Assets ₹ 1,00,000; Current Liabilities ₹ 40,000. Calculate the value of Inventory.
The solution of Question 16 Chapter 4 of +2-B: - 
Solution: - (a)

Current Ratio
=
1.5 : 1

Current Assets
=
Current Assets

Current Liabilities

Current Liabilities
=
₹ 1,00,000

₹ 40,000

=
2.5: 1

Inventories
=
Current Assets –Quick Assets

Quick Assets*
=
₹ 40,000 X 1.5

=
₹ 60

Question 17

Question 17 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 17 Chapter 4 of +2-B
I. Liquidity Ratios
17. (Revised Current Ratio) Calculate the revised current ratio

Current Ratio
2:1

Current Liabilities
₹ 1,00,000

Long term Debt
₹ 1,50,000

Trade Payable Paid
₹ 20,000

Long term Debt Paid
₹ 30,000

Received cash from trade receivables
₹ 40,000

The solution of Question 17 Chapter 4 of +2-B: - 
Solution: - (a)

Current Ratio
=
1.5 : 1

Current Ratio
=
Current Assets

Current Liabilities

2
=
Current Assets

₹ 1,

Question 18

Question 18 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 18 Chapter 4 of +2-B
I. Liquidity Ratios
18. (Maintaining between Current Ratio) The ratio of Current Assets (₹ 6,00,000) to CurrentLiabilities is 1.5: 1. The accountant of this firm is interested in maintaining a current ratio of 2: 1 by paying some part of the Current Liabilities. You are required to suggest to him the number of current liabilities which must be paid for this purpose.
 
The solution of Question 18 Chapter 4 of +2-B: -

Current Assets
=
₹ 6,00,000

=
1.5 : 1

Question 19

Question 19 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 19 Chapter 4 of +2-B
I. Liquidity Ratios
19. (Maintaining Lower Current Ratio than Existing) The ratio of Current Assets (₹ 10,00,000) to Current Liabilities (₹ 4,00,000) is 2.5 : 1. The accountant of this firm is interested in maintaining a current ratio of 2 : 1 by acquiring some part of current assets on credit. You are required to suggest him the amount of current assets which must be acquired for this purpose.
The solution of Question 19 Chapter 4 of +2-B: -

Current Ratio
=
1.

Question 20

Question 20 Chapter 4 of +2-B  - USHA Publication  12 Class

Sarbjit Singh · Accepted Answer

Question 20 Chapter 4 of +2-B
I. Liquidity Ratios
20. A firm had current assets of ₹ 2,00,000. It then paid a current liability of ₹ 50,000. After this payment the current ratio was 2 : 1. Determine the size of current liabilities and working capital after and before the payment was made.
The solution of Question 20 Chapter 4 of +2-B: -

Current Assets before payment
=
₹ 2,00,000

Current Liabilities paid
=
₹ 50,000

Current Assets after payment of Current Liabilities
=
₹ 1,50,000

Curren

Particular	₹
I. Equity and Liabilities
Shareholders’ Funds
Share Capital	21,000
Reserve and Surplus
surplus in Statement of Profit and Loss	2,500
Reserves	1,500
Current Liabilities
Short-term Borrowings :
Bank Overdraft	2,000
Trade Payable	6,000
	33,000
II. Assets
Non-Current Assets
Tangible Assets
Fixed Assets (Net)	17,000
Current Assets
Inventories	6,200
Trade Receivable	3,200
Input CGST	1,500
Input SGST	1,500
Cash	3,600
	33,000

Current Assets	=	Inventories + Trade Receivable + Input CGST + Input SGST + Cash
	=	₹ 6,200 + ₹ 3,200 + ₹ 1,500 + ₹ 1,500 + ₹ 3,600
	=	₹ 16,000

Current Liabilities	=	Bank Overdraft + Trade Payable
	=	₹ 2,000 + ₹6,000
	=	₹ 8,000

USHA Publication Part 2 volume I Solutions Chapter No. 4 - Accounting Ratios

Quick Chapter Summary & Cheat Sheet

💡 Double Entry Accounting Principles

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Question 01 Chapter 4 of +2-B - USHA Publication 12 Class

The solution of Question 01 Chapter 4 of +2-B: -

Question 02 Chapter 4 of +2-B - USHA Publication 12 Class

Question 03 Chapter 4 of +2-B - USHA Publication 12 Class

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