Lakshya Education MCQs

Question: Determine debtors turnover ratio if, closing debtors is Rs 40,000, total sales is Rs 4,00,000. Credit sales is 25% of total sales and excess of closing debtors over opening debtors is Rs 30,000.
Options:
A.4 Times
B.2 times
C.6 times
D.8 times
Answer: Option A
: A

Credit Sales = 25% of Rs, 4,00,000
= Rs 1,00,000.

Closing Debtors = Rs 40,000
Opening Debtors = Rs 40,000 - Rs 30,000
= Rs 10,000

Average Debtors = (Rs 40,000 + Rs 10,000)/2
= Rs 25,000

Debtors turover ratio = Rs 1,00,000 / Rs 25,000
= 4 times

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More Questions on This Topic :

Question 1. What will be the operating profit ratio, if operating ratio is 83.64%?
  1.    11.06%
  2.    83.64%
  3.    16.36%
  4.    None of these
Answer: Option C
: C

Operating Profit Ratio = 100% - operating ratio

=100%- 83.64% = 16.36%
Question 2. A ______ working capital turnover ratio indicates that a business is investing in too many accounts receivable and inventory assets to support its sales.
  1.    Low
  2.    High
  3.    Moderate
  4.    None of these
Answer: Option A
: A

A lowworking capital turnover ratio indicates that a business is investing in too many accounts receivable and inventory assets to support its sales.
Question 3. Trade payables turnover ratio is expressed in terms of ___
  1.    Percentage
  2.    Times
  3.    Days
  4.    None of these
Answer: Option B
: B

Payables turnover ratio is expressed in terms of times.
Question 4. Trade receivables turnover ratio is expressed in terms of ___
  1.    Percentage
  2.    Times
  3.    Days
  4.    None of these
Answer: Option B
: B

Receivables turnover ratio is expressed in terms of times

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