# IGCSE Accounting Paper-2: Specimen Questions with Answers 66 - 69 of 103

## Passage

The following information is provided by Micromax Ltd:

Net Sales £100000; Cost of goods sold £60000; operating expenses £15000; Current assets £30000; Current liabilities £15000; Capital employed 120000; Long term debts £80000

## Question number: 66 (4 of 6 Based on Passage) Show Passage

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### Write in Short

What is the difference between current ratio and quick ratio?

### Explanation

The difference between current ratio and quick ratio is as follows:

(i) In the computation of current ratio, the value of inventory is taken into consideration, while in quick ratio the value of inventory is not required.

(ii) For any firm, the benchmark current ratio is 2: 1, while quick ratio is 1: 1.

## Question number: 67 (5 of 6 Based on Passage) Show Passage

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### Write in Short

Calculate the following ratios of Micromax Ltd

(ii) Debt equity ratio

(iii)

(ii)

## Question number: 68 (6 of 6 Based on Passage) Show Passage

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### Write in Short

Calculate the following ratios of Micromax Ltd

(i) Operating profit ratio

(i

(i)

## Passage

Singer and Dancer are partners sharing profit in the ratio of 3: 2. Their balance sheet on 31st March 2014 was as follows:

 Liabilities Amount Assets Amount Singer’s Capital 32500 Bank 40500 Dancer’s Capital 11500 Stock 7500 Creditors 48000 Debtors - 21500 Less: Provision for doubtful debts - 500 21000 Reserve fund 13500 Fixed Assets 36500 105500 105500

On 31st March 2014, they decided to dissolve the firm and the following information was provided by them: (i) Debtors were realized at a discount of 5%; (ii) Stock at £7000; (iii) Fixed assets at £42000; (iv) realization expenses were £1500; (v) All the creditors were fully paid.

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