QC
Branch Accounting & Financial Ratios Quiz
10 MCQs • Suggested time: 10–15 minutes
Q1. Disclosure of which ratio is not required as per new Schedule III of Companies Act, 2013?
Answer: B. **Net Capital Turnover Ratio** is not among the standard ratios mandated for disclosure under the amended Schedule III; Schedule III lists specific liquidity, solvency and activity ratios to be disclosed in notes to accounts
Q2. Account prepared for calculation of Gross Profit Earned by branch under Stock & Debtors system is
Answer: B. Branch Adjustment Account is prepared to compute gross profit earned by the branch under Stock & Debtors system by reconciling stock, sales and expenses between HO and branch.
Q3. Which method is used generally for small size branches?
Answer: C. Small Branch Method is a simplified approach used where branch records are minimal; it avoids detailed branch ledger maintenance.
Q4. Which account is prepared when branch sells goods on credit?
Answer: B. Branch Debtors Account records credit sales made by branch and tracks receivables due to head office.
Q5. Goods sent by Head office to branch are either at cost plus profit or at
Answer: B. Head office may invoice branch at selling price (cost plus markup) or at cost; selling price is commonly used when branch acts as independent seller.
Q6. Financial statements of companies are prepared as per which schedule of Companies Act, 2013?
Answer: A. Schedule III prescribes the format and disclosures for financial statements under the Companies Act, 2013.
Q7. Which ratio measures ability to meet current obligations?
Answer: C. Liquidity ratios (e.g., current ratio, quick ratio) measure short-term solvency and ability to meet current obligations.
Q8. Acid-Test Ratio is also known as
Answer: C. Acid-test is the Quick Ratio (current assets minus inventories divided by current liabilities).
Q9. Which ratio is covered under Activity Ratio?
Answer: D. Inventory Turnover is an activity (efficiency) ratio measuring how quickly inventory is sold.
Q10. Which ratio is not covered under Leverage Ratio?
Answer: B. Return on Equity is a profitability ratio, not a leverage ratio which focuses on capital structure and solvency.
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