A 'High Current Ratio' indicates: MCQ with Answer and Explanation

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A 'High Current Ratio' indicates:

A. High profitability

B. Excess liquidity, possibly inefficient use of assets

C. Poor liquidity

D. Insolvency

Answer: Option B

Solution (By JKSSB Mock Tests)

Very high current ratio may indicate idle current assets, not necessarily good.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

The 'Statement of Changes in Equity' as per Ind AS 1 includes:

A. Only reserves

B. Only dividends

C. Only share capital

D. Total comprehensive income, transactions with owners, and reconciliation of equity components

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Correct Answer: Option D

Explanation:
It shows all changes in equity, including profit/loss, OCI, capital transactions, dividends.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

Question #2

'Benami Transactions' are prohibited under:

A. Income Tax Act

B. GST Act

C. Benami Transactions (Prohibition) Act, 1988

D. Companies Act

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Correct Answer: Option C

Explanation:
Benami property transactions are illegal under the Benami Act.

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Question #3

What is the rule of Double Entry for Real Accounts?

A. Debit what comes in, Credit what goes out

B. Debit the increase, Credit the decrease

C. Debit the receiver, Credit the giver

D. Debit all expenses, Credit all incomes

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Correct Answer: Option A

Explanation:
Real accounts relate to tangible or intangible assets. The golden rule is 'Debit what comes in, Credit what goes out'.

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