Question : Which of the following transactions will improve the current ratio?
Option 1: Repayment of a Current Liability.
Option 2: Purchase of goods for cash.
Option 3: Purchase of goods on credit.
Option 4: Sale of goods for Rs.2,00,000 (Cost Rs. 1,50,000).
Correct Answer: Repayment of a Current Liability.
Solution : Answer = Repayment of a Current Liability.
Let, C.ratio= 2:1; C.Assets= 20,000; C.Liab. = 10,000
If Payment of C.liab = rs. 5000
New C.Assets = 20,000-5000 = 1,5000
New C. Liab = 10,000 -5,000 = 5000
New C.ratio = $\frac{15000}{ 5000}$= 3:1(increase). Hence, the correct option is 1.
Question : Which of the following transactions will decrease the current ratio?
Option 1: Sale of goods for Rs.2,00,000 (Cost Rs. 1,50,000).
Option 2: Sale of goods for Rs.2,00,000 (Cost Rs.2,20,000)
Option 3: Sale of furniture for Rs.40,000 (Book Value Rs.50,000
Option 4: Bill Receivable endorsed to a Creditor
Question : The Gross Profit Ratio of a Company is 20%. Which of the following transactions will not change in gross profit ratio?
Option 1: Goods costing Rs. 1,50,000 sold for Rs. 2,00,000.
Option 2: Goods costing Rs. 3,40,000 sold for Rs. 4,00,000.
Option 3: Revenue from Operations Rs. 2,00,000.
Option 4: None of the above
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