International Commerce Olympiad

1. Under which major heading “Unclaimed Dividend” appears in the Balance Sheet of a Company.

(a) Current Assets

(b) Non Current Liabilities

(d) Share holders fund

Ans: (c) Current liabilities and Provisions

2. Investments which are necessary for the operations of the business enterprise are called

(a) Long Term Investments (b) Short Term Investments

Ans: (d) Trade Investments

3. If Quick ratio is 2 : 1. State the effect of purchase goods on credit for ₹ 2,000

(a) Improve (b) Reduce

Ans: (b) Reduce

4. Dividend is usually paid on:

(a) Authorised Capital (b) Issued Capital

Ans: (c) Paid-up Capital

5. Working Capital Ratio is calculated by the formula:

(a) Current Assets/Current liabilities

(b) Net working capital/Net Sales

(d) Working capital/Capital Employed

Ans: (a) Current Assets/Current liabilities

6. Which ratio indicates the proportion of total assets financed by shareholders Funds.

(a) Total Assets to Debt Ratio (b) Fixed Assets turnover Ratio

Ans: (c) Proprietary Ratio

7. Horizontal analysis is:

(a) The calculation of relative weighting of components within a particular financial period.

(b) The comparison of the current year’s figures with the previous year’s figures.

(d) The comparison of the profit and loss account with the balance sheet.

Ans: (b) The comparison of the current year’s figures with the previous year’s figures.

8. Which Ratio measure the firm’s ability to meet its short term obligations.

(a) Liquidity Ratios. (b) Liquid Ratio

Ans: (a) Liquidity Ratios.

9. The Debt Equity Ratio from the following information will be:

Total Assets ₹ 5,30,000

Current Liabilities ₹ 1,80,000

Total Debts ₹ 3,30,000

(a) 0.75 : 1 (b) 0.77 : 1

Ans: (a) 0.75 : 1

10. What will be the sales from the following particulars Opening Stock ₹ 4,00,000

Inventory Turnover Ratio 6 Times

Gross Profit 20% on sales

Further Closing stock is twice the opening stock.

(a) ₹ 4,50,000 (c) ₹ 3,60,000

(b) ₹ 2,88,000 (d) ₹ 4,80,0000

Ans: (a) ₹ 4,50,000

11. Match columns-I and columns-II:

Column-I Column-II

(i) Employees A. Interested in knowing the profitability and financial strength of the enterprise

(ii) Creditors B. Interested in knowing the progress of the enterprise to ensure the safety and recovery of the loan advanced

(iii) Owners C. Interested in knowing the ability of the enterprise to provide remuneration, retirement benefits and employment opportunities.

(iv) Banks and Financial Enterprise D. Interested in knowing about the credit worthiness of the business.

Select from the following options:

(a) (i)-B; (ii)-D; (iii)-A; (iv)-C (b) (i)-C; (ii)-A; (iii)-D; (iv)-B

Ans: (c) (i)-C; (ii)-D; (iii)-A; (iv)-B

12. If current ratio of a company is 2 : 1. What will be the effect on this ratio when current assets increases by ₹ 50,000 and current liabilities increases by ₹ 40,000.

(a) The current ratio will increase

(b) The current ratio will decrease.

(d) The ratio increased to 2.5 : 1.

Ans: (b) The current ratio will decrease

13. The proprietary ratio of a firm is 60%. Which of the following transactions would not result in increase in this ratio?

(a) Issue of preference shares

(b) Conversion of debentures into preference shares.

(d) Purchase of goods on credit

Ans: (d) Purchase of goods on credit

14. The Interest coverage ratio from the following information will be:

General Reserve ₹ 45,000,

Share Capital ₹ 2,00,000,

15% Loan ₹ 1,00,000

Sales for the year ₹ 2,50,000

Tax paid during the year ₹ 40,000

Profit after interest and tax ₹ 80,000

(a) 9 Times (b) 6 Times

Ans: (a) 9 Times

15. The Operating profit ratio from the following information will be:

Selling and distribution expenses ₹ 40,000

Interest paid on debentures ₹ 9,000

Net Profit ₹ 71,000

Rent received ₹ 5,000

Net Sales ₹ 5,00,000

(a) 54% (b) 5.4%

Ans: (c) 15%

16. Where will ‘Loose tools' be shown in the Balance Sheet of a company as per revised schedule III:

(a) Under the head Non-current assets sub head Tangible assets

(b) Under the head Non-current assets sub head Intangible assets

(d Under the head Current assets sub head Inventories.

Ans: (d) Under the head Current assets sub head Inventories.

17. In common size statement of Profit and Loss is taken as base figure for calculation of percentages.

(a) Total Revenue (b) Profit before Tax

Ans: (c) Revenue from operations

18. Current ratio of a company is 2.5 : 1 and its Quick ratio is 1.5 : 1. Payment of dividend already declared would result in:

(a) Increase in Current Ratio and Quick Ratio

(b) Decrease in Current Ratio and Quick Ratio

(d) No effect on Quick Ratio

Ans: (b) Decrease in Current Ratio and Quick Ratio

19. Which ratio indicates the proportion of total assets financed by shareholders funds?

(a) Total Assets to Debt Ratio (b) Fixed Assets turnover Ratio

Ans: (c) Proprietary Ratio

20. What will be the gross profit from the following particulars Opening Stock ₹ 40,000 Inventory turnover Ratio 6 times Gross profit 20% on revenue from operations. Additional Information: Closing stock is twice the opening stock.

(a) ₹ 90,000 (b) ₹ 3,60,000

Ans: (a) ₹ 90,000

21. Working capital turnover ratio is calculated by the formula:

(a) Revenue from operations/Working Capital

(b) Net Working Capital/Revenue from operations

(d) Current Assets/Current Liabilities

Ans: (a) Revenue from operations/Working Capital

22. is included in current assets while preparing balance sheet as per

revised Schedule III but excluded from current assets while calculating Current Ratio

(a) Debtors

(b) Cash and Cash Equivalent

(d) Bank Balance

Ans: (c) Loose tools and Stores and spares

23. Which of the following is not a limitation of Financial Statement Analysis?

(a) Ignores price level changes (b) Qualitative aspect is ignored

Ans: (d) Judging Managerial efficiency

24. If Quick ratio is 3 : 1, What will be the effect on quick ratio in case of purchase of machinery on credit basis for two months?

(a) Improve (b) Reduce

Ans: (b) Reduce

25. What ratio can be used to avoid inefficient buying habits?

(a) Working Turnover Ratio (b) Gross Profit Ratio

Ans: (d) Inventory Turnover Ratio

26. measures a firm’s ability to pay all of its fixed charges or expenses

with its income before interest and income tax

(a) Return on investment (b) Current ratio

Ans: (d) Interest Coverage Ratio

27. If Operating Cycle is 8 months and any amount receivable in 11 months will be categorized as

(a) Current Assets (b) Non-urrent Assets

Ans: (a) Current Assets

28. Following sub-headings are to be shown in the balance sheet of the company.

(i) Cash and Cash Equivalents (ii) Other Current Assets

(iii) Inventories (iv) Current Investment

(v) Trade Receivables

What will be the correct order of showing them in the books?

(a) (i), (iii), (iv), (v), (ii) (b) (iii), (iv), (i), (ii), (v)

Ans: (c) (iv), (iii), (v), (i), (ii)

29. Identify the correct match:

A. Debt (i) Opening Inventory + Net Purchases + Direct Expenses – Closing Inventory

B. Equity (ii) Shareholder’s Fund + Long term Debts

C. Capital Employed (iii) Share Capital + Reserves and Surplus

D. Cost of Revenue from (iv) Total Debt – Current Liabilities Operations

Choose the correct option:

(a) A-(ii), B-(iii), C-(iv), D-(i) (b) A-(iv), B-(ii), C-(iii), D-(i)

Ans: (c) A-(iv), B-(iii), C-(ii), D-(i)

30. The current ratio of a XYZ Ltd is 1. What will be its working capital?

(a) 1 (b) 0

Ans: (b) 0

31. Debt-Equity Ratio of Dhamaka Ltd is 3 : 1. Which of the following will result in decline in this ratio?

(a) Issue of Debentures for Cash of ₹ 2,00,000.

(b) Issue of Debentures of ₹ 3,00,000 to Vendors from whom Machinery was purchased.

(d) Issue of Equity Shares of ₹ 2,00,000.

Ans: (d) Issue of Equity Shares of ₹ 2,00,000.

32. Shareholders’ Funds doesn’t include from the following

(a)Share Capital

(b) Share Application Money Pending Allotment

(d) Reserves and Surplus

Ans: (b) Share Application Money Pending Allotment

33. Pick the odd one out.

(a) Share Capital (b) Reserves and Surplus

Ans: (c) Non-Trade Investment

34. Match the following:

Column-I Column-II

(i) Loose Tools (a) Intangible Fixed Assets

(ii) Mastheads and Publishing (b) Other Current Assets Titles

(iii) Pre-paid Insurance (c) Short term Provisions

(iv) Provision for tax (d) Inventories Choose the correct option:

(a) (i)-(a); (ii)-(c); (iii)-(d); (iv)-(d)

(b) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)

(d) (i)-(c); (ii)-(a); (iii)-(b); (iv)-(d)

Ans: (b) (i)-(d); (ii)-(a); (iii)-(b); (iv)-(c)

35. Which of the following will improve the Current Ratio if Current Ratio is 0.8 : 1

(a) Sales of Goods on Credit costing ₹ 20,000 for ₹ 18,000

(b) ₹ 20,000 paid to Creditors

(d) Purchase of goods costing ₹ 20,000 on credit.

Ans: (d) Purchase of goods costing ₹ 20,000 on credit.

36. In a common size statement, % shown against Employee Benefit expenses is 25% and its amount is ₹ 4,00,000. What is Revenue from Operations for this organisation?

(a) ₹ 1,00,000 (b) ₹ 20,00,000

Ans: (c) ₹ 16,00,000

37. From the following information, compute Debt-Equity Ratio

Long term Borrowings ₹ 2,00,000;

Long term Provisions ₹ 1,00,000;

Shareholder Funds ₹ 1,20,000;

Reserves and Surplus ₹ 30,000;

Current Liabilities ₹ 50,000.

(a) 2 : 1 ( b) 2.5 : 1

37. (b)

38. Classify the following as a type of liability: Trade payable expected to be paid in 14 months and the operating cycle is of 19 months :

(a) Current Liability (b) Non-Current Liability

Ans: (a) Current Liability

39. Under which main head Deferred Tax Liability is shown in the Balance Sheet as per the Companies Act 2013?

(a) Non-Current Liability

(b) Current Liability

(d) Share Application Money pending Allotment

Ans: (a) Non-Current Liability

40. Which two Current Assets are not taken into consideration while calculating Current Assets for determining Current Ratio:

(a) Loose tools, stores and spares

(b) Prepaid expenses, Closing stock

(d) None of (a) or (b)

Ans: (a) Loose tools, stores and spares

41. Which ratio is used to determine the efficiency of people engaged in debt collection department:

(a) Debt Equity Ratio (b) Trade Receivables’ Turnover Ratio

Ans: (b) Trade Receivables’ Turnover Ratio

42. If profit after interest and tax is ₹ 1,68,000, calculate profit before interest and tax if tax rate is 40% and interest amount is ₹ 70,000:

(a) ₹ 3,05,200 (b) ₹ 3,50,000

Ans: (b) ₹ 3,50,000

43. Capital employed is equal to:

(a) Equity + Debt

(b) Fixed Assets + Current Assets – Current Liabilities

(d) All of the above

Ans: (a) Equity + Debt

44. In a Common Size Balance Sheet of ABC Ltd. Current Assets amounted to ₹ 20,00,000 and it is mentioned as 40% in the statement. If Current Liabilities are ₹ 15,00,000, then what should be the Percentage specified in front of Current Liabilities:

(a) 75% (b) 133.3%

Ans: (c) 30%