Question : Assertion (A): The sale of items for Rs. 25,000 (cost: Rs. 20,000) in cash will lower the ratio if the current ratio is 2:1.
Reason (R): Selling goods for Rs.25,000 will result in a Rs.25,000 gain in current assets (Cash/Trade Debtors) and a Rs.20,000 decrease in current assets (goods). As a result, current assets will rise byRs. 5,000, which will boost the current ratio.

Option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Option 2: Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)

Option 3: Assertion (A) is true but Reason (R) is False
 

Option 4: Assertion (A) is False and Reason (R) is True.

Question : Assertion: If the Current Ratio is 5: 1, the purchase of goods of Rs.60,000 on credit will reduce the ratio.
Reason (R): Current assets (Goods) and Current Liabilities will both rise as a result of the credit purchase of goods for Rs.50,000. (Creditors). As a result, the

Question : Assertion (A): If working capital is Rs. 2,40,000, current assets are Rs. 4,000,00, which includes Rs. 2,000 in inventory. There will be a current ratio of 2.5:1.
Reason (R): Current Ratio = Current Assets/Current Liabilities

Question : Assertion (A): If Trade Payables are Rs.80,000, Working Capital is Rs.16,00,000, and Current Liabilities are Rs.6,00,000, the Current Ratio will be 2:1.
Reason (R): Current Ratio = Current Assets/Current Liabilities

Question : Assertion (A): Payment of the Rs.10,000 current liability will raise the Current Ratio if it is now 2:1.
Reason (R): Paying down an Rs.10,000 current liability will result in a Rs. 10,000 reduction in both current assets (cash) and current liabilities. As a result,

Question : Assertion (A): Current Assets/Current Liabilities is the formula for calculating the current ratio
Reason (R): The current ratio is derived by dividing current assets by current liabilities. Current assets are made up of spare parts, loose tools, and stores.