ACCOUNTING and RATIO ANALYSIS
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for VIDEO LECTURES OF ASHISH SIR (FOR ALL SCALES) — Bank Promotions.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the accounting equation that forms the foundation of double-entry bookkeeping?
Assets = Liabilities + Owner's Equity. Every transaction affects at least two accounts, keeping this equation in balance.
What is the formula for the Quick Ratio (Acid Test Ratio)?
(Current Assets minus Inventory) divided by Current Liabilities
What does the Current Ratio measure and what is its formula?
Current Ratio measures a bank's short-term liquidity by dividing Current Assets by Current Liabilities. A ratio above 1 indicates the entity can meet its short-term obligations.
What does a Current Ratio below 1 indicate about a company?
Company cannot meet its short-term obligations with current assets
What is the difference between capital expenditure and revenue expenditure in banking?
Capital expenditure creates a long-term asset (e.g., purchase of premises), while revenue expenditure is incurred for day-to-day operations (e.g., salaries, rent) and is charged to the Profit & Loss account in the same year.
What is the formula for Return on Capital Employed (ROCE)?
EBIT divided by Capital Employed, expressed as percentage
What is the Debt-Equity Ratio and what does a high value indicate?
Debt-Equity Ratio = Total Debt / Shareholders' Equity. A high ratio indicates greater financial leverage and higher risk, as the business relies more on borrowed funds than own funds.
What is meant by 'Going Concern' concept in accounting?
Business is assumed to continue operating indefinitely into the future
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