1.

State with reason, whether the Proprietary Ratio will improve, decline or will not change because of the following transactions if Proprietary Ratio is 0.8 : 1:(i) Obtained a loan of ₹ 5,00,000 from State Bank of India payable after five years.(ii) Purchased machinery of ₹ 2,00,000 by cheque.(iii) Redeemed 7% Redeemable Preference Shares ₹ 3,00,000.(iv) Issued equity shares to the vendor of building purchased for ₹ 7,00,000.(v) Redeemed 10% redeemable debentures of ₹ 6,00,000.

Answer» State with reason, whether the Proprietary Ratio will improve, decline or will not change because of the following transactions if Proprietary Ratio is 0.8 : 1:



(i) Obtained a loan of ₹ 5,00,000 from State Bank of India payable after five years.

(ii) Purchased machinery of ₹ 2,00,000 by cheque.

(iii) Redeemed 7% Redeemable Preference Shares ₹ 3,00,000.

(iv) Issued equity shares to the vendor of building purchased for ₹ 7,00,000.

(v) Redeemed 10% redeemable debentures of ₹ 6,00,000.


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