The 'Proprietary Ratio' establishes relationship between: MCQ with Answer and Explanation

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The 'Proprietary Ratio' establishes relationship between:

A. Debt and equity

B. Proprietors' funds and total assets

C. Sales and debtors

D. Current assets and current liabilities

Answer: Option B

Solution (By JKSSB Mock Tests)

Proprietary ratio = Shareholders' funds / Total assets, indicating the proportion of assets financed by owners.

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

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Question #1

The 'Test of Details' includes:

A. Budget comparison

B. Vouching, tracing, and inspection of documents

C. Trend analysis

D. Ratio analysis

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Correct Answer: Option B

Explanation:
Test of details are specific tests of transactions and balances.

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Question #2

Under-casting of a Sales book by Rs 1,000 will result in:

A. Debit column of Trial Balance being short by Rs 1,000

B. No effect on the Trial Balance totals

C. Suspense account with a debit balance

D. Credit column of Trial Balance being short by Rs 1,000

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Correct Answer: Option D

Explanation:
Sales have a credit balance. If it's under-casted, the total credit postings will be Rs 1,000 less, making the credit column short.

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Question #3

Under the concept of 'Social Return on Investment' (SROI), a ratio of 3:1 indicates:

A. Financial profit is 3 times the social profit

B. Rs 3 of investment creates Rs 1 of social value

C. Rs 1 of investment creates Rs 3 of social value

D. Taxes are 300% of profit

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Correct Answer: Option C

Explanation:
SROI expresses the social value created for every unit of currency invested. A 3:1 ratio means Rs 3 of value is created per Rs 1 invested.

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