Question : Which of the following statements is not true?
Option 1: The current ratio establishes a relationship between Current Assets and Current Liabilities.
Option 2: Current Ratio $=\frac{\text { Current Assets }}{\text { Current Liabilities }}$
Option 3: It measures the ability of the firm to meet its current liabilities within 12 months from the date of the Balance Sheet or within the period of the operating cycle.
Option 4: The current Ratio of 1:1 is considered an ideal ratio
Correct Answer: The current Ratio of 1:1 is considered an ideal ratio
Solution : Answer = The Current Ratio of 1:1 is considered an ideal ratio.
The ideal current ratio is 2:1 . A current ratio of 1:1 means current assets equal current liabilities, which may indicate liquidity challenges. Ideally, a current ratio slightly above one is preferred for financial stability. Hence, the correct option is 4.
Question : ---------------- are the assets which are likely to be converted into cash or cash equivalents within 12 months from the date of the Balance Sheet or within the period of an operating cycle.
Question : When Period of Operating Cycle is less than 12 Months: Liabilities due for settlement (payment) within 12 months from the date of Balance Sheet are classified (shown) as ------------------
Question : If the Expected Payment period is more than the period of the Operating Cycle and after 12 months from the date of the Balance Sheet.
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