12th Accountancy - Book Back Answers - Unit 9 - English Medium Guides ~ Kalvi Tips

12th - Accountancy - Book Back Answers - Unit 9 - English Medium

Tamil Nadu Board 12th Standard Accountancy - Unit 9: Book Back Answers and Solutions

This post covers the book back answers and solutions for Unit 9 – from the Tamil Nadu State Board 12th Standard Accountancy textbook. These detailed answers have been carefully prepared by our expert teachers at KalviTips.com.

We have explained each answer in a simple, easy-to-understand format, highlighting important points step by step under the relevant subtopics. Students are advised to read and memorize these subtopics thoroughly. Once you understand the main concepts, you’ll be able to connect other related points with real-life examples and confidently present them in your tests and exams.

By going through this material, you’ll gain a strong understanding of Unit 9 along with the corresponding book back questions and answers (PDF format).

Question Types Covered:

1 Mark Questions: Choose the correct answer,
2 Mark Questions: Very Short Answer Questions
3, 4, and 5 Mark Questions: Short Answer Questions, Excercises

All answers are presented in a clear and student-friendly manner, focusing on key points to help you score full marks.

All the best, Class 12th students! Prepare well and aim for top scores. Thank you!

Topic: Unit 9 :Ratio Analysis

I. Choose the correct Answer

I. Choose the Correct Answer Key

Question 1.
The mathematical expression that provides a measure of the relationship between two figures is called ……………..
(a) Conclusion
(b) Ratio
(c) Model
(d) Decision
Answer Key:
(b) Ratio

Question 2.
Current ratio indicates ……………..
(a) Ability to meet short term obligations
(b) Efficiency of management
(c) Profitability
(d) Long term solvency
Answer Key:
(a) Ability to meet short term obligations

Question 3.
Current assets excluding inventory and prepaid expenses is called ……………..
(a) Reserves
(b) Tangible assets
(c) Funds
(d) Quick assets
Answer Key:
(d) Quick assets

Question 4.
The debt equity ratio is a measure of ……………..
(a) Short term solvency
(b) Long term solvency
(c) Profitability
(d) Efficiency
Answer Key:
(b) Long term solvency

Question 5.
Match List-I with List-II and select the correct Answer Key using the codes given below:
List I        List II
(i) Current ratio - 1. Liquidity
(ii) Net profit ratio -2. Efficiency
(iii) Debt-equity ratio -3. Long term solvency
(iv) Inventory turnover ratio -4. Profitability
Codes:    (i)    (ii)    (iii)    (iv)
(a)            1   4       3   2
(b)            3   2       4       1
(c)            4   3       2       1
(d)            1     2       3       4
Answer Key:
(a) 1 4 3 2

Question 6.
To test the liquidity of a concern, which of the following ratios are useful?
(i) Quick ratio
(ii) Net profit ratio
(iii) Debt – equity ratio
(iv) Current ratio
Select the correct Answer Key using the codes given below:
(a) (i) and (ii)
(b) (i) and (iv)
(c) (ii) and (iii)
(d) (ii) and (iv)
Answer Key:
(b) (i) and (iv)

Question 7.
The proportion of shareholder’s funds to total assets is called ……………..
(a) Proprietary ratio
(b) Capital gearing ratio
(c) Debt equity ratio
(d) Current ratio
Answer Key:
(a) Proprietary ratio

Question 8.
Which one of the following is not correctly matched?
(a) Liquid ratio – Proportion
(b) Gross profit ratio – Percentage
(c) Fixed assets turnover ratio – Percentage
(d) Debt – equity ratio – Proportion
Answer Key:
(c) Fixed assets turnover ratio – Percentage

Question 9.
Current liabilities RS 40,000; Current assets RS 1,00,000 ; Inventory RS 20,000 . Quick ratio is ……………..
(a) 1:1
(b) 2.5:1
(c) 2:1
(d) 1:2
Answer Key:
(c) 2:1

Question 10.
Cost of revenue from operations RS 3,00,000; Inventory in the beginning of the year RS 60,000; Inventory at the close of the year RS 40,000. The inventory turnover ratio is
(a) 2 times
(b) 3 times
(c) 6 times
(d) 8 times
Answer Key:
(c) 6 times

II.Very short answer questions

1. What is meant by accounting ratios?

Ratio is a mathematical expression of relationship between two related or interdependent items. It is the numerical or quantitative relationship between two items.

2. What is quick ratio?

Quick ratio gives the proportion of quick assets to current liabilities.
Quick ratio = Quick Assets/Current liabilities

3. What is meant by debt equity ratio?

Debt Equity ratio =Long term debt/Shareholders’ funds
Debt equity ratio is calculated to assess the long-term solvency position of a business concern.

4. What does return on investment ratio indicate?

Return on investment shows the proportion of net profit before interest and tax to capital employed (shareholders’ funds and long-term debts).
Return on investment = (Net profit before interest and tax/Capital employed) x 100

5. State any two limitations of ratio analysis.

i) Ratios are only means:

Ratios are not end in themselves but they are only means to achieve a particular purpose.

ii) Change in price level:

Ratio analysis may not reflect price level changes and current values as they are calculated based on historical data given in financial statements.

III. Short answer questions

1. Explain the objectives of ratio analysis.

To simplify accounting figures To facilitate analysis of financial statements
To analysis the operational efficiency of a business
To help in budgeting and forecasting
To facilitate inter firm and inter firm comparison of performance

2. What is inventory conversion period? How is it calculated?

Inventory conversion period is the time taken to sell the inventory. A shorter inventory conversion period indicates more efficiency in the management of inventory.
Inventory conversion period in days(In days) =Number of days in a year/Inventory turnover ratio
Inventory conversion period in months( In months ) =Number of months in a year/Inventory turnover ratio

3. How is operating profit ascertained?

Operating cost ratio is the proportion of operating cost to revenue from operations. This ratio is a test of the operational efficiency of the business.
Operating cost ratio = (operating cost/Revenue from operations)x 100

4. State any three advantages of ratio analysis.

i) Measuring operational efficiency:

Ratio analysis helps to know operational efficiency of a business by finding the relationship between operating cost and revenues.

ii) Measuring financial solvency:

Ratio analysis helps to ascertain the liquidity or short-term solvency and long-term solvency of a business concern.

iii) Analysis the profitability:

Ratio analysis helps to analysis the profitability of a business in terms of sales and investments.

5. Bring out the limitations of ratio analysis.

i) Ratios are only means:

Ratios are not end in themselves but they are only means to achieve a particular purpose.

ii) Accuracy of financial information:

The accuracy of a ratio depends on the accuracy of information taken from financial statements.

iii) Change in price level:

Ratio analysis may not reflect price level changes and current values as they are calculated based on historical data given in financial statements.

IV. Excercises

12th Accountancy