Skip to content

A) A company had a… (Class 12 Accountancy SQP 2023-24, Q32)

questionbuddy.in/q/cbse-12-accountancy-2023-24-sqp-q32-company-had-liquid-ratio-current

AccountancyCBSE Class 12 · Sample paper, session 2023-24 · 3 marks · Short answer

CBSE Class 12 Accountancy sample paper 2023-24: question 32

From the official CBSE sample question paper for 2023-24, section B-I, question 32, for 3 marks. Try it first; the hints and our step-by-step solution are below.

Q32 · 3 marks · Short answerAccounting Ratios

a) A company had a liquid ratio of 1.5 and current ratio of 2 and inventory turnover ratio 6 times. It had total current assets of ₹8,00,000. Find out annual sales if goods are sold at 25% profit on cost.
b) Calculate debt to capital employed ratio from the following information.
Shareholder funds ₹15,00,000
8% Debenture ₹7,50,000
Current liabilities ₹2,50,000
Non-current Assets ₹17,50,000
Current Assets ₹7,50,000

Source: official sample paper from cbseacademic.nic.in (PDF). See it in the full Sample paper 2023-24.

Hints

Open one hint at a time and try again before the next.

Hint 1

Inventory is the gap between current assets and liquid assets.

Hint 2

Inventory turnover uses cost of revenue, not sales.

Hint 3

Capital employed = shareholders' funds + long-term debt.

Step-by-step solution

Each step shows the marks it earns, as an examiner would award them. Checked by an independent re-solve from the question paper.

  1. (a) Current liabilities = ₹ 8,00,000 / 2 = ₹ 4,00,000; liquid assets = 1.5 × ₹ 4,00,000 = ₹ 6,00,000; inventory = ₹ 2,00,000. Cost of revenue from operations = 6 × ₹ 2,00,000 = ₹ 12,00,000. Gross profit 25% on cost = ₹ 3,00,000. Sales = ₹ 15,00,000.

    2 marks

  2. (b) Capital employed = shareholders' funds ₹ 15,00,000 + debentures ₹ 7,50,000 = ₹ 22,50,000 (also non-current assets + current assets − current liabilities). Debt to capital employed = ₹ 7,50,000 / ₹ 22,50,000 = 0.33 : 1.

    1 mark

Answer: (a) Revenue from operations ₹ 15,00,000; (b) Debt to capital employed ratio 0.33 : 1

Where the marks are

  • Sales ₹ 15,00,000 (2 marks)
  • Debt to capital employed 0.33 : 1 (1 mark)

Revise the chapter

  • Chapter: Accounting Ratios (notes, formulas, where marks are lost and every past question)
Practise this chapterBoard-style questions from Accounting Ratios, one at a time, marked against the answer key and marking points.Back to the full paperSample paper 2023-24: every question, by section.

The question is transcribed from the official paper; figures are described in words. The solution, hints and chapter tag are ours. Spotted an error? Write tosupport@questionbuddy.in.