::: vuaskari.com ::: my fin621 paper

past se 70% mcqs thy
 
 subjective question

If a company uses Rs.20, 000 to buy merchandise for inventory. What do you think would be the effect on working capital? Give reason.?
 ans

If company purchase inventory on cash current assets of company increase and on the other hand cash is decrease.  So there is no effect in working capital.
 
 
 why compny issued common stock on discount.wht is will be reason?Question No: 52    ( Marks: 5 ) 

 

 Following is the balance sheet of the ABC Company.ABC CorporationBalance SheetMar. 31, 1991 
Assets
CashRs. 12,500
Notes receivables104,000
Accounts receivables (net)68,500
Inventories at cost50,000
Plan & equipment (net of depreciation)646,000
Total assetsRs. 881,000
Liabilities & Stockholder's equity
Accounts payableRs. 72,000
Notes payable54,500
Accrued liabilities 6,000
Common stock (60,000 shares, Rs. 10par)600,000
Retained earnings148,500
Total liabilities and owner's equityRs. 881,000

 Requirement:Calculate the current ratio and quick ratio for both years. (2.5+ 2.5)       

 

   Current Ratio=Current Assets / Current Liabilities
                              =  235,000 / 132,500
                                = 1.77                                  
 
         Quick Ratio           = Current Assets - Inventories / Current Liabilities
                                      = (235,000 – 50,000) / 132,500
 
                                      = 185,000 / 132,500
                                      = 1.39
    
 
Question No: 46    (Marks: 5 )  Consider the following information.  Cash Rs. 15,000 Beginning net receivables Rs. 55,000 Ending net receivables Rs. 57,000 Net sales Rs. 640,000 Net credit sales Rs. 480,000 Cost of goods sold Rs. 390,000 Average inventory Rs. 62,000  Requirement:Compute the receivable turnover to the nearest tenth. 
Receivables turn over ratio    = Net credit sales /Average Debtors
                                      = 480,000 / [(55,000+57,000)/2]
                                      = 480,000 / 56,000
                                      = 8.57

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