Question : Credit Revenue from Operations Rs. 2,00,000; Opening Trade Receivables Rs. 30,000 and Closing Trade Receivables Rs. 50,000 . which of the following transactions will Decrease ....................
Option 1: Collection from trade receivables Rs. 10,000
Option 2: Sold goods on credit Rs. 20,000
Option 3: Revenue from Operations returns Rs. 4,000
Option 4: Credit purchase Rs. 50,000
Correct Answer: Credit purchase Rs. 50,000
Solution :
Answer =
Credit purchase Rs. 50,000
Trade receivable turnover ratio=$\frac{\text{Net credit sales}}{\text{Average trade receivables}}$
⇒$\frac{2,00,000}{40,000}$= 5 times.
Average trade receivable= $\frac{30,000+50,000}{2}$= $\frac{80,000}{2}$= 40,000.
Purchase of goods on credit will not affect on trade receivables turnover ratio.
Hence, the correct option is 4.
