Which of the following transaction will affect the

Q: Answer-Which of the following transaction will affect the current ratio?

We can take an example and understand how 3 will affect current ratio Current Asset and Current liability are 100 60 respectively. Current ratio will be 1.66. Now lets assume we Purchased goods on credit amount to 10 Rs. So due to this transaction, both CA CL will increase by 10 Rs. Current Asset and Current liability will now be 110 70 respectively. Current ratio will change to 1.57.

current ratio?

A Debentures issued in consideration of Machinery purchased Correct Answer Incorrect Answer

B Conversion of Debentures into Equity shares Correct Answer Incorrect Answer

C Purchased goods on credit Correct Answer Incorrect Answer

D Goods sold for cash Correct Answer Incorrect Answer

Solution

We can take an example and understand how (3) will affect current ratio: Current Asset and Current liability are 100 & 60 respectively. Current ratio will be 1.66. Now let’s assume we Purchased goods on credit amount to 10 Rs. So due to this transaction, both CA & CL will increase by 10 Rs. Current Asset and Current liability will now be 110 & 70 respectively. Current ratio will change to 1.57.

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EMRS Hostel Warden, JSA and Accountant

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