 # DK Goel Solutions for Class 12 Accountancy Vol 2 Chapter 5 Accounting Ratios

DK Goel Accountancy Class 12 Solutions Vol 2 Chapter 5 Accounting Ratios which is outlined by expert Accountancy teachers from the latest version of DK Goel Accountancy Class 12 textbook solutions. We at BYJU’S provide DK Goel Solutions to assist students to comprehend all the theories in particular. Learn more concepts in Accountancy, however, the concepts of Admission of a partner, Accounting Ratios and Cash Flow Statement (As per AS – 3 Revised) is required.

## DK Goel Solutions Class 12 – Chapter 5 – Part B

Question 1

From the following, compute the current ratio.

 ₹ Non-Current Investments 1,00,000 Current Investments 40,000 Inventories (including loose tools of ₹ 50,000/-) 2,80,000 Trade Receivables: Sundry Debtors 1,60,000 Bills Receivables 20,000 Trade Payables: Sundry Creditors 1,20,000 Bills Payables 10,000 Long-term Borrowings 2,00,000 Short-term Borrowings 50,000 Short-term Provision (Provision for Tax) 20,000 Cash and Bank Balance 30,000

Solution:

$$Current\, Ratio=\: \frac{Current\: Assets}{Current\: Liabilities}$$

Current Assets = Current Investments + Inventories (Excluding Loose Tools) + Trade Receivables (Sundry Debtors + Bills Receivables) + Cash and Bank Balance

= 40,000 + 2,30,000 + 1,60,000 + 20,000 + 30,000

= ₹. 4,80,000/-

Current Liabilities = Trade Payables (Sundry Creditors + Bills Payables) + Short term Borrowings + Short term Provision (Provision for Tax)

= 1,20,000 + 10,000 + 50,000 + 20,000

= ₹. 2,00,000/-

$$Current\, Ratio=\: \frac{4,80,000}{2,00,000} = 2:4:1$$

Question 2

Following particulars are given to you:

 ₹ Trade Investmests 2,50,000 Marketeable Secuities 40,000 Tangible Fixed Assets 6,00,000 Intangible Assets (Goodwill) 1,00,000 Trade Receivables 2,00,000 1,80,000 Less: Provision for Doubtful Debts 20,000 Cash and Bank Balance 80,000 Trade Payables 1,20,000 Rent Payables 10,000 Dividend Payable 30,000 Inventories 3,90,000 Long term Borrowings (8% Debentures) 2,80,000 Short term Borrowings (Bank Overdraft) 25,000 Short term Provisions: Provisions for Tax 55,000 Income Tax paid in Advance 30,000

Calculate the Liquidity Ratios.

Solution:

Liquidity Ratios include the following 2 ratios. Namely,

• Current ratio
• Quick ratio
$$Current\, Ratio\, =\, \frac{Current\, Assets}{Current\, Liabilities}$$

Current Assets = Marketable Securities + Trade Receivables + Cash and Bank Balance + Inventories + Income Tax paid in advance

= 40,000 + 1,80,000 + 80,000 + 3,90,000 + 30,000

= ₹. 7,20,000/-

Current Liabilities = Trade Payables + Rent Payable + Dividend Payable + Bank Overdraft + Provisions for Tax

= 1,20,000 + 10,000 + 30,000 + 25,000 + 55,000

= ₹. 2,40,000/-

$$Current \, Ratio\, =\, \frac{7,20,000}{2,40,000}\, =\, 3:1$$

$$Quick\, Ratio\, =\, \frac{Liquid\, Assets\, or\, Quick\, Assets}{Current\, Liabilities}$$

Liquid Assets = Current Assets – Inventories – Income Tax Paid in Advance

= 7,20,000 – 3,90,000 – 30,000

= 3,00,000

$$Quick\, Ratio\, =\, \frac{3,00,000}{2,40,000}\, =\, 1.25:1$$

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 DK Goel Accountancy Solutions Class 12 – Part B (Chapter wise) Chapter 1 Financial Statements of Companies (As per Schedule III) Chapter 2 Financial Statements Analysis Chapter 3 Tools for Financial Analysis: Comparative Statements Chapter 4 Common Size Statements Chapter 6 Cash Flow Statement (As per AS – 3 Revised)

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#### 1 Comment

1. Smith Boylon

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