A company's current ratio is 2:1. If current liabilities are ₹1,00,000, current assets are: MCQ with Answer and Explanation

Question
A company's current ratio is 2:1. If current liabilities are ₹1,00,000, current assets are:
A. ₹1,00,000
B. ₹3,00,000
C. ₹2,00,000
D. ₹50,000
Answer: Option C
Solution (By JKSSB Mock Tests)
Current ratio = Current assets / Current liabilities; 2 = CA / 1,00,000 => CA = ₹2,00,000.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
In 'Piecemeal Distribution' during dissolution, the first priority for payment of outside liabilities is:
A. Secured creditors up to the value of security
B. Partners' loans
C. Partners' capital balances
D. Unsecured trade creditors
Discuss
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Correct Answer: Option A

Explanation:
Secured creditors have the first right over the assets they hold as security. Any remaining dues become unsecured.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
Which account acts as a 'contra' account to Gross Debtors in the Balance Sheet?
A. Provision for Doubtful Debts Account
B. Bad Debts Account
C. Sales Return Account
D. Discount Allowed Account
Discuss
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Correct Answer: Option A

Explanation:
Provision for doubtful debts has a credit balance and is deducted from the debit balance of Debtors, acting as a contra-asset.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
Which of the following is a direct tax in India?
A. Goods and Services Tax
B. Customs duty
C. Corporate tax
D. Excise duty on liquor
Discuss
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Correct Answer: Option C

Explanation:
Corporate tax is levied directly on company profits, thus a direct tax.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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