Accountancy

The total debtors of X Ltd. were Rs. 9,00,000. It had created a provision of 10% for bad and doubtful debts. What amount of debtors will be used for calculating the ‘Trade Receivables Turnover Ratio’? (C.B.S.E. 2020, Mumbai, Chennai).

SOLUTION Rs. 9,00,000.

Continue ReadingThe total debtors of X Ltd. were Rs. 9,00,000. It had created a provision of 10% for bad and doubtful debts. What amount of debtors will be used for calculating the ‘Trade Receivables Turnover Ratio’? (C.B.S.E. 2020, Mumbai, Chennai).

The trade receivables turnover ratio of a company is 6 times. State with reasons whether the ratio will improve, decrease or riot change due to increase in the value of closing inventory by Rs. 50,000.

SOLUTION There will be no change due to increase in the value of closing inventory by Rs. 50,000 because it will neither affect net credit Revenue from Operations nor average…

Continue ReadingThe trade receivables turnover ratio of a company is 6 times. State with reasons whether the ratio will improve, decrease or riot change due to increase in the value of closing inventory by Rs. 50,000.

Trade Receivables turnover ratio of a Company is 3 times, State, giving reason, whether this ratio will (a) increase, (b) decrease, or (c) not alter because of Credit Revenue from Operations of Rs. 50,000.

SOLUTION Trade Receivables turnover ratio will decrease because of equal increase in credit Revenue from Operations and closing trade receivables.

Continue ReadingTrade Receivables turnover ratio of a Company is 3 times, State, giving reason, whether this ratio will (a) increase, (b) decrease, or (c) not alter because of Credit Revenue from Operations of Rs. 50,000.

State giving reason, whether the trade receivables turnover ratio will: (a) increase, (b) decrease, or (c) not alter because of ‘cash collected from trade receivables’.

SOLUTION Trade Receivables turnover ratio will increase because cash collected from trade receivables will decrease the closing trade receivables.

Continue ReadingState giving reason, whether the trade receivables turnover ratio will: (a) increase, (b) decrease, or (c) not alter because of ‘cash collected from trade receivables’.