ATTEMPT ALL QUESTIONS IT IS A SERIOUS OFFENCE COMING TO THE HALL WITH ANY ELECTRONIC DEVICE

We assume a year has 360 days for calculation purposes in this context.

$$\text{Days Inventory Outstanding (DIO)} = \frac{\text{Number of days in a year}}{\text{Stock turnover ratio}}$$ $$\text{DIO} = \frac{360 \text{ days}}{4 \text{ times}} = 90 \text{ days}$$

The collection period is also known as Days Sales Outstanding (DSO).

$$\text{Operating Cycle} = \text{Days Inventory Outstanding (DIO)} + \text{Collection Period (DSO)}$$ $$\text{Operating Cycle} = 90 \text{ days} + 30 \text{ days} = 120 \text{ days}$$

• The correct option is d) 120.

3. Given that current liabilities are at N. 300,000, current ratio is 3:1 and quick ratio is 1:1, the value of stock will be:

$$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$$ $$3 = \frac{\text{Current Assets}}{\text{N. } 300,000}$$ $$\text{Current Assets} = 3 \times \text{N. } 300,000 = \text{N. } 900,000$$

$$\text{Quick Ratio} = \frac{\text{Current Assets} - \text{Inventory}}{\text{Current Liabilities}}$$ $$1 = \frac{\text{N. } 900,000 - \text{Inventory}}{\text{N. } 300,000}$$ $$\text{N. } 300,000 = \text{N. } 900,000 - \text{Inventory}$$ $$\text{Inventory} = \text{N. } 900,000 - \text{N. } 300,000 = \text{N. } 600,000$$

• The correct option is a) 600,000.

4. Acid test ratio should normally be ----
The acid test ratio, also known as the quick ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. A ratio of 1:1 is generally considered healthy.

• The correct option is b) 1:1.

5. The other name of marginal costing is ____
Marginal costing is also commonly known as variable costing or direct costing. Incremental costing is a related concept but often used in decision-making rather than as a direct synonym for the costing method itself. However, given "All of the above" as an option, it implies that all three are considered alternative names or closely related terms in this context.

• The correct option is d) All of the above.

6. Profit volume ratio establishes the relationship between ____
The Profit Volume (P/V) ratio, or Contribution Margin Ratio, shows the relationship between the contribution margin and sales revenue.

• The correct option is d) Contribution and sales value.

7. ____ is the excess of sales over the break-even sales.
The margin of safety is the difference between actual or budgeted sales and the break-even sales. It indicates how much sales can decrease before the company starts incurring losses.

• The correct option is d) Margin of safety.