Question:
...... is also known as the Acid Test Ratio.
...... is also known as the Acid Test Ratio.
Show Hint
The formula for the quick ratio is: \(\text{Quick Assets} \div \text{Current Liabilities}\).
Updated On: Jan 28, 2025
- Current ratio
- Quick ratio
- Gross profit ratio
- Return on investment ratio
Show Solution
Verified By Collegedunia
The Correct Option is B
Solution and Explanation
The quick ratio, also known as the acid test ratio, measures the ability of a company to meet its short-term liabilities using its most liquid assets. It excludes inventory from current assets to provide a more accurate measure of liquidity.
Was this answer helpful?
0
0
Top CBSE CLASS XII Accountancy Questions
From the following Balance Sheet of Hira Ltd. as at 31st March, 2023, prepare Comparative Balance Sheet:
- On 1st May, 2023, Amrit Ltd. issued 10,000, 10% debentures of ₹100 each at a premium of 10%, redeemable at a premium of 10%. Loss on issue of debentures will be:
- Gupta and Sharma are partners in a firm sharing profit in the ratio of 4:1. They admitted Preeti as a new partner for \( \frac{1}{4} \) share in the profits, which she acquired wholly from Gupta. The new profit sharing ratio of Gupta, Sharma, and Preeti will be:
- On the dissolution of a partnership firm, there were debtors of ₹34,000. Debtors of ₹1,000 became bad, and 60% was realized from the remaining debtors. Which account will be debited and by how much amount on the realization from debtors?
- If vendors are issued fully paid shares of ₹1,25,000 in purchase consideration of net assets of ₹1,50,000, the balance of ₹25,000 will be credited to:
View More Questions
Top CBSE CLASS XII Assets & Liabilities Questions
- Statement I: Financing activities relate to long-term funds or capital of an enterprise.
Statement II: Separate disclosure of cash flows arising from financing activities is important because they represent the extent to which expenditures have been made for resources intended to generate future income and cash flows.
Choose the correct option from the following: - From the above information, ‘Cash flows from investing activities’ will be: \[ \begin{array}{|c|c|} Purchased (\rupee) & Sold (\rupee)
\text{Investments: 2,00,000} & \text{Investments: 1,80,000}
\text{Goodwill: 3,00,000} & \text{Goodwill: --}
\end{array} \] - Quick ratio of Megamart Ltd. is 1.5:1. Which of the following transactions will result in a decrease in this ratio?
- The average inventory of AB Ltd. is \rupee 1,00,000 and the inventory turnover ratio is 6 times. Calculate the amount of revenue from operations if goods are sold at a profit of 25\% on revenue from operations.
- From the above information, ‘Cash flows from investing activities’ will be: % Table \begin{center} \begin{tabular}{|l|r|r|} Particulars & Purchased (\rupee) & Sold (\rupee)
Investments & 2,00,000 & 1,80,000
Goodwill & 3,00,000 & --
\end{tabular} \end{center}
View More Questions
Top CBSE CLASS XII Questions
- 2, b, c are in A.P. and the range of determinant $\begin{vmatrix}1&1&1\\ 2&b&c\\ 4&b^{2}&c^{2}\end{vmatrix}$ is [2, 16]. Then find range of c is
- A boy of mass 50 kg is standing at one end of a, boat of length 9 m and mass 400 kg. He runs to the other, end. The distance through which the centre of mass of the boat boy system moves is
- A capillary tube of radius r is dipped inside a large vessel of water. The mass of water raised above water level is M. If the radius of capillary is doubled, the mass of water inside capillary will be
- A circular disc is rotating about its own axis. An external opposing torque 0.02 Nm is applied on the disc by which it comes rest in 5 seconds. The initial angular momentum of disc is
- A circular disc is rotating about its own axis at uniform angular velocity \(\omega.\) The disc is subjected to uniform angular retardation by which its angular velocity is decreased to \(\frac {\omega}{2}\) during 120 rotations. The number of rotations further made by it before coming to rest is
View More Questions