Which ratio measures the short-term solvency of a firm? MCQ with Answer and Explanation

Question
Which ratio measures the short-term solvency of a firm?
A. Debt-Equity Ratio
B. Interest Coverage Ratio
C. Proprietary Ratio
D. Current Ratio
Answer: Option D
Solution (By JKSSB Mock Tests)
The Current Ratio compares current assets to current liabilities, indicating the firm's ability to meet its short-term obligations.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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Question #1
In the Indian Financial Management System, the Consolidated Fund of India is operated by:
A. The Prime Minister
B. The Finance Minister
C. The RBI Governor
D. The President of India
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Correct Answer: Option D

Explanation:
All revenues received by the Government of India and all loans raised are credited to the Consolidated Fund, which is operated by the President.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #2
Under the Straight Line Method of depreciation, the amount of depreciation:
A. Decreases every year
B. Fluctuates based on usage
C. Remains constant every year
D. Increases every year
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Correct Answer: Option C

Explanation:
SLM calculates depreciation on the original cost, resulting in the same amount being charged each year.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
Question #3
The 'Fraud' in an audit context refers to:
A. Negligence
B. Any error
C. Unintentional misstatement
D. Intentional act by one or more individuals among management, those charged with governance, employees, or third parties involving deception to obtain an unjust or illegal advantage
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Correct Answer: Option D

Explanation:
Fraud is intentional; error is unintentional.
This question belongs to: Accountancy and Statistics Accountancy and Book Keeping
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