The 'Price Earning' (P/E) ratio is calculated as: MCQ with Answer and Explanation

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The 'Price Earning' (P/E) ratio is calculated as:

A. Dividend / Market price

B. Earnings per share / Market price per share

C. Market price per share / Earnings per share

D. Market price / Book value

Answer: Option C

Solution (By JKSSB Mock Tests)

P/E ratio indicates how much investors are willing to pay per rupee of earnings.

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

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Question #1

Which of the following ratios is a measure of long-term solvency?

A. Debt-equity ratio

B. Quick ratio

C. Inventory turnover ratio

D. Current ratio

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Correct Answer: Option A

Explanation:
Debt-equity ratio indicates financial leverage and long-term solvency.

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Question #2

A trade discount is:

A. Given for prompt payment

B. Deducted from the list price and not recorded in the books

C. Treated as a non-operating expense

D. Recorded separately in the books of accounts

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Correct Answer: Option B

Explanation:
Trade discount is a reduction from the catalogue price given for bulk purchases and is not recorded in the accounting books.

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Question #3

A tax levied on a person based on their net wealth was the Wealth Tax. In India, Wealth Tax was abolished in:

A. 2017

B. 2005

C. 1991

D. 2015

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Correct Answer: Option D

Explanation:
Wealth tax was abolished in the Union Budget of 2015-16, replaced by an additional surcharge on the super-rich.

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

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