The term 'Liquidity Ratio' includes: MCQ with Answer and Explanation

The term 'Liquidity Ratio' includes:
A. Debt-Equity Ratio and Proprietary Ratio
B. Stock Turnover Ratio and Debtors Turnover Ratio
C. Gross Profit Ratio and Net Profit Ratio
D. Current Ratio and Quick Ratio
Answer: Option D
Solution (By JKSSB Mock Tests)
Liquidity ratios measure the short-term solvency of a firm and include the Current Ratio and the Quick (or Acid-Test) Ratio.

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Practice More Accountancy and Book Keeping Questions

Question #1
S1: Revaluation Account is prepared at the time of admission of a partner. S2: Revaluation Account is prepared at the time of retirement of a partner. Which statement(s) is/are correct?
A. S2 only
B. S1 only
C. Both S1 and S2
D. Neither S1 nor S2

Correct Answer: Option C


Explanation:
A Revaluation Account is prepared whenever there is a change in the constitution of the firm, including admission, retirement, or death of a partner, to adjust the values of assets and liabilities. Both statements are correct.

Question #2
The 'Concept of Prudence' under Ind AS is:
A. Not specifically identified as a separate concept; neutrality overrides prudence
B. An overriding principle
C. A fundamental accounting assumption
D. Always applied

Correct Answer: Option A


Explanation:
The Conceptual Framework under Ind AS/IFRS does not include prudence as a separate qualitative characteristic; it emphasises neutrality.

Question #3
Assertion (A): The Public Financial Management System (PFMS) integrates with the Core Banking Solutions (CBS) of banks. Reason (R): This integration ensures that funds are credited directly to the beneficiary's account, eliminating leakages. Choose the correct option.
A. A is true but R is false
B. Both A and R are true but R is NOT the correct explanation of A
C. A is false but R is true
D. Both A and R are true and R is the correct explanation of A

Correct Answer: Option D


Explanation:
PFMS integrates with CBS to enable Direct Benefit Transfer (DBT). This direct credit to beneficiary accounts ensures transparency and eliminates middlemen, correctly explaining the purpose of the integration.