1.

Assuming that the Current Ratio is 2 : 1, state, giving reasons, which of the following transactions would (i) improve, (ii) reduce, or (iii) not alter, the current ratio, (i) Cash collected from trade receivables or cash received against B/R on its maturity. (ii) B/R received from trade receivables or B/R drawn. (iii) B/R endorsed to trade payables. (iv) B/R dishonoured. (v) Sale of Inventories at par for cash.

Answer»

Assuming that the Current Ratio is 2 : 1, state, giving reasons, which of the following transactions would (i) improve, (ii) reduce, or (iii) not alter, the current ratio,

(i) Cash collected from trade receivables or cash received against B/R on its maturity.

(ii) B/R received from trade receivables or B/R drawn.

(iii) B/R endorsed to trade payables.

(iv) B/R dishonoured.

(v) Sale of Inventories at par for cash.



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