Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

ABC Ltd., a telecom company was passing through a bad phase of business cycle and banks were unwilling to lend further amount. It decided to do introspection and compiled following information for the purposes of analysis:

 PARTICULARS  AMOUNT (₹)
 Total debts  900000
 Preference share capital  100000
 Shareholders funds  200000
 Current liabilities  400000
 Purchases  90000
 Excess of opening inventory over closing inventory  10000
 Aggregate of opening and closing inventory  50000

What will be the amount of long-term debt of the company?

Options:

₹500000

₹400000

₹900000

₹600000

Correct Answer:

₹500000

Explanation:

Long term debt = total debt - current liabilities
                        = 900000 - 400000
                        = ₹500000