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

Short Answer Question▾

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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

Short Answer Question▾

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Calculate the following ratios of Micromax Ltd

(ii) Debt equity ratio

Explanation

(iii)

(ii)

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

Short Answer Question▾

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Calculate the following ratios of Micromax Ltd

(i) Operating profit ratio

Explanation

(i)

Passage

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

**Singer and Dancer are partners sharing profit in the ratio**

Find out ratio of amount
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 31^st 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.

Question number: 69 (1 of 5 Based on Passage) Show Passage

Short Answer Question▾

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Does Dissolution of firm mean the same as dissolution of partnership?

Explanation

No, Dissolution of firm is not the same as dissolution of partnership. Two of the basic differences between the two term’s are as follows:

(i) In dissolution of partnership, the business is not terminated, but in dissolution of a firm; the business is terminated.

(ii) In dissolution of partnership; the assets and liabilities are revalued and a new balance sheet is drawn, where as in the dissolution of a firm, the assets are sold and the liabilities are paid off in full settlement.