In financial statement analysis, the current ratio is calculated as: MCQ with Answer and Explanation

In financial statement analysis, the current ratio is calculated as:
A. Total assets / Total liabilities
B. Current assets / Current liabilities
C. Quick assets / Current liabilities
D. Current liabilities / Current assets
Answer: Option B
Solution (By JKSSB Mock Tests)
Current ratio = Current assets / Current liabilities, measuring short-term liquidity.

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Practice More Accountancy and Book Keeping Questions

Question #1
If the total of debit side of trial balance is ₹1,50,000 and credit side is ₹1,45,000, the suspense account will be:
A. Debit ₹1,45,000
B. Debit ₹5,000
C. Credit ₹1,50,000
D. Credit ₹5,000

Correct Answer: Option D


Explanation:
Credit side is short by ₹5,000, so suspense account is credited to balance.

Question #2
A: The Public Account of India includes funds like the Provident Fund. R: The government can withdraw money from the Public Account without parliamentary approval. Choose the correct option.
A. Both A and R are true but R is NOT the correct explanation of A
B. Both A and R are true and R is the correct explanation of A
C. A is false but R is true
D. A is true but R is false

Correct Answer: Option B


Explanation:
The Public Account of India holds money like Provident Funds, where the government acts as a banker. Since these funds belong to others, the government can make payments from this account without parliamentary approval. Both are true and R explains A.

Question #3
The 'Outstanding Salary' is recorded by:
A. No entry
B. Debit Salary A/c, Credit Outstanding Salary A/c
C. Debit Outstanding Salary A/c, Credit Salary A/c
D. Debit Cash A/c, Credit Salary A/c

Correct Answer: Option B


Explanation:
To record accrued expense: Salary A/c Dr. To Outstanding Salary A/c.