Working capital is calculated as: MCQ with Answer and Explanation

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Working capital is calculated as:

A. Current assets - Current liabilities

B. Total assets - Total liabilities

C. Fixed assets - Long-term liabilities

D. Quick assets - Current liabilities

Answer: Option A

Solution (By JKSSB Mock Tests)

Working capital = Current assets - Current liabilities.

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

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Question #1

The cost of capital serves as the:

A. Guaranteed return to equity shareholders

B. Maximum acceptable rate of return on investments

C. Interest rate charged by commercial banks

D. Minimum required rate of return for an investment

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Correct Answer: Option D

Explanation:
Cost of capital is the hurdle rate or minimum return a company must earn on its investments to maintain its market value.

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

Question #2

Which of the following items is shown in the Profit and Loss Appropriation Account of a partnership firm?

A. Discount allowed to debtors

B. Office electricity expenses

C. Salary to partners

D. Rent paid to partner's building

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Correct Answer: Option C

Explanation:
Salary to partners is an appropriation of profit, hence shown in P&L Appropriation A/c, not in P&L A/c.

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Question #3

The minimum subscription in a public issue should be at least:

A. 100%

B. 75% of issued capital

C. 50% of issued capital

D. 90% of issued capital

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Correct Answer: Option D

Explanation:
As per SEBI, minimum subscription is 90% of the issue size for public offers.

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

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