Question : One transaction results in an increase in the 'Liquid Ratio' and no change in the 'Current Ratio'.
Option 1: Sale of Inventory at Cost Price
Option 2: Sale of inventory at profit
Option 3: Sale of inventory at loss
Option 4: Purchased goods in cash

Question

Question : One transaction results in an increase in the 'Liquid Ratio' and no change in the 'Current Ratio'.

Option 1: Sale of Inventory at Cost Price

Option 2: Sale of inventory at profit

Option 3: Sale of inventory at loss

Option 4: Purchased goods in cash

Team Careers360 · Accepted Answer

Correct Answer: Purchased goods in cash

Solution : Answer = Purchased goods in cash

When purchased goods in cash, neither the Current Assets nor the current liabilities are affected since it is a conversion of one current Asset into another current asset.

Purchased Goods in Cash will reduce the total of quick Assets. Therefore, the Quick ratio will decrease.
Hence, the correct option is 4.

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Question : One transaction results in an increase in the 'Liquid Ratio' and no change in the 'Current Ratio'.
Option 1: Sale of Inventory at Cost Price
Option 2: Sale of inventory at profit
Option 3: Sale of inventory at loss
Option 4: Purchased goods in cash

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