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Accounting and Finance Previous Year Questions

Accounting & finance for BankingQues

JAIIB Exam Study Material: Accounting and Finance Previous Year Questions

Balance Sheet

Liabilities (Rs.)
Equity shares of Rs. 10 each - 1,00,000
Reserves - 20,000
P.L. A/c - 30,000
Secured loan - 80,000
Sundry creditors - 50,000
Provision for taxation - 20,000

Assets (Rs.)
Goodwill - 60000
Fixed Assets - 140000
Stock - 30000
Sundry Debtors - 30000
Advances - 10000
Cash Balance - 10000

The sales for the year were Rs. 5,60,000.

Calculate the following ratios from the balance sheet given above :

1. Debt – Equity Ratio

a. 0.53
b. 1
c. 1.4
d. 4

Ans - a
.............................................

2. Liquidity Ratio

a. 0.53
b. 1
c. 1.4
d. 4

Ans - b
.............................................

3. Fixed Assets to Current Assets

a. 0.53
b. 1
c. 1.4
d. 4

Ans - c
.............................................

4. Fixed Assets Turnover

a. 0.53
b. 1
c. 1.4
d. 4

Ans - d
.............................................

Solution :

1. a
Debt–Equity Ratio = Long–Term Debt / Shareholders Fund
Long–Term Debt = Secured loan = Rs. 80,000

Shareholder’s Fund = Equity Share Capital + Reserves + P.L. A/c
= 1,00,000 + 20,000 + 30,000 = 1,50,000

Debt-Equity Ratio = 80,000 / 1,50,000 = 0.53

2. b
Liquidity Ratio = Liquid Assets / Liquid Liabilities
Liquid Assets = Sundry Debtors + Advances + Cash Balance
30,000 + 10,000 + 30,000
= 70,000

Liquid Liabilities = Provision for Taxation + sundry creditors
= 20,000 + 50,000
= 70,000

Liquid Ratio = 70,000 / 70,000 = 1

3. c
Fixed Assets to Current Assets = Fixed Assets / Current Assets
= 1,40,000/ 100000
= 1.4

4. d
Fixed Assets Turnover = Turnover / Fixed Assets
= 5,60,000 / 1,40,000
= 4
.............................................

If cost of goods sold Rs 1,80,000 and Gross profit rate is 25% then find ......

1. Rate of profit on cost

a. 17.5%
b. 25%
c. 33.33%
d. 40%

Ans - c

2. Gross profit

a. Rs.30000
b. Rs.40000
c. Rs.50000
d. Rs.60000

Ans - d

3. Sales

a. Rs.60000
b. Rs.120000
c. Rs.180000
d. Rs.240000

Ans - d

Solution :

1. c
Rate of Gross Profit = (Gross Profit/Net Sales) X 100
Now in this question rate of gross profit is given. Obviously it means the percentage of gross profit from sales. In the question we are not given the figure of sales but we are given the figure of 'Cost of Goods Sold. In simple language COGS means the cost of those goods which have been sold. Let us now learn to calculate rate of gross profit on cost of goods sold.
Let the sales price be = 100
Less Profit (25%) = 25
Cost of goods sold = 75
Rate of profit on cost = (25/75) x 100 = 33.33% or 1/3 of cost

2. d
Cost of goods sold = Rs.180000
Gross profit (33.33%) = Rs.180000 x33.33/100 = Rs.60000

3. d
Sales = COGS + Gross Profit = Rs.180000 + 60000 = Rs.240000
.............................................

From the below given information, calculate ...

Total Revenue - 1,00,000
Cost of Goods Sold - 20,000
Salaries - 10,000
Rent- 10,000
Utilities - 5,000
Depreciation - 5,000
Interest Expense - 10,000
Taxes - 10,000

1. Gross Profit

a. 30,000
b. 50,000
c. 70,000
d. 80,000

Ans - d

2. Operating Expenses

a. 30,000
b. 50,000
c. 70,000
d. 80,000

Ans - a

3. Total Expenses

a. 30,000
b. 50,000
c. 70,000
d. 80,000

Ans - c

4. Net Profit

a. 30,000
b. 50,000
c. 70,000
d. 80,000

Ans - a

Solution :

1. d
Gross Profit = Total Revenue - Cost of Goods Sold
= 100,000 - 20,000
= 80,000

2. a
Operating Expenses = Salaries + Rent + Utilities + Depreciation
= 10,000 + 10,000 + 5,000 + 5,000
= 30,000

3. c
Total Expenses = Cost of Goods Sold + Operating Expenses + Interest Expense + Taxes
= 20,000 + 30,000 + 10,000 + 10,000
= 70,000

4. a
Net Profit = Total Revenue - Total Expenses
= 1,00,000 - 70,000
= 30,000
.............................................

Which of the following statements are true? (i) Common-size balance sheet shows relative value of the various items, (ii) In the common size income statement, each product is represented as a percentage of the net sales figure, (iii) Common size income statements represent the various elements as a percentage of the gross profit

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - a
.............................................

Which of the following statements are true? (i) Vertical Analysis is also termed as dynamic analysis, (ii) Horizontal analysis is also termed as dynamic analysis, (iii) Static Analysis is not extremely useful for the long-term financial planning

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - c
.............................................

Which of the following statements are true? (i) Funds Flow statement is one of the ways to analysis & interpret financial statements, (ii) Cash Flow Statement is one of the ways to analysis & interprets financial statements, (iii) Common-size statement one of the ways to analysis & interprets financial statements

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - d
.............................................

Working capital gap is not ...... (i) Current Assets less Current Liabilities, (ii) Current Assets less Current Liabilities other than Bank Borrowings, (iii) 75% of Current Assets

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - b
.............................................

Creditors' period is worked out on the basis of...... (i) Cost of production, (ii) Purchases, (iii) Cost of sales

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - b
.............................................

Operating Profit Ratio is not ...... (i) Operating profit/sales x 100%, (ii) Operating Profit/100 x sales%, (iii) Operating Profit/Income x 100%

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - c
.............................................

Quick Ratio is...... (i) Other name of acid test ratio, (ii) Equal to quick assets:quick liabilities

a. Only (i)
b. Only (ii)
c. Either (i) or (ii)
d. Both (i) and (ii)

Ans - a
.............................................

Working capital limits are not supposed to be repaid out of...... (i) Capital, (ii) Sales, (iii) Current assets

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - a
.............................................

Current Ratio is not calculated as...... (i) Current Assets divided by Current Liabilities, (ii) Fixed Assets divided by Current Assets, (iii) Owned funds divided by Current Liabilities

a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)

Ans - c
.............................................

For a dealer in truck vehicles, a truck is...... (i) A current assets, (ii) A fixed assets

a. Only (i)
b. Only (ii)
c. Either (i) or (ii)
d. Both (i) and (ii)

Ans - a
.............................................

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