Question : The Current Ratio of the company is 2:1. The Sale of Office Equipment for Rs. 4,000 (Book Value Rs.5,000) would
Option 1: Increase current Ratio
Option 2: Decrease Current ratio
Option 3: Have no effect on current ratio
Option 4: Decrease gross profit ratio
Correct Answer: Increase current Ratio
Solution : Answer = Increase Current Ratio
If C.Assets = 2,00,000, C.liab = 1,00,000, then C.Ratio= 2:1
Sale of office Equipment 4000(Book value Rs 5000)
New Current Assets = 2,04,000
New Current Liab. = 1,00,000
New Current Ratio = $\frac{2,04,000}{1,00,000}$= 2.04:1 (Increase)
Hence, the correct option is 1.
Question : The Current Ratio of a Company is 2:1. Redemption of Debentures would
Question : The current Ratio of X Ltd. is 2.5: 1. The Company purchased furniture of Rs. 45,000. The Vendor was paid by issue of equity shares of Rs. 10 each at par would
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