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The Current Ratio of a Company is 2 : 1. State, giving reasons which of the following transactions would (i) improve, (ii) reduce of (iii) not alter, the current ratio: (a) Repayment of a Current Liability (b) Purchasing goods on credit (c) Sale of an Office Equipment for Rs. 4,000 (Book Value Rs. 5,000) (d) Sale of goods for Rs. 11,000 (Cost Rs 10,000) (e) Redemption of Debentures. |
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Answer» The Current Ratio of a Company is 2 : 1. State, giving reasons which of the following transactions would (i) improve, (ii) reduce of (iii) not alter, the current ratio: (a) Repayment of a Current Liability (b) Purchasing goods on credit (c) Sale of an Office Equipment for Rs. 4,000 (Book Value Rs. 5,000) (d) Sale of goods for Rs. 11,000 (Cost Rs 10,000) (e) Redemption of Debentures. |
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