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Which of the following will increase the current ratio which is currently 2:1?
- a)Bills Receivable of ₹2,000 endorsed to a creditor is dishonored.
- b)₹ 8,000 cash collected from debtors of ₹ 8,500 is full and final settlement.
- c)Sale of goods worth ₹ 11,000 (cost ₹ 10,000)
- d)Purchase of inventory ₹ 20,000 on credit.
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
Which of the following will increase the current ratio which is curren...
It will increase cash by ₹11,000 and decrease the stock by ₹10,000 and ultimately, the current ratio will improve or increase.
Most Upvoted Answer
Which of the following will increase the current ratio which is curren...
Explanation:
Effects of each option on the current ratio:
- Bills Receivable of 2,000 endorsed to a creditor is dishonored: This will not have any impact on the current ratio as it does not involve any cash or current assets.
- 8,000 cash collected from debtors of 8,500 is full and final settlement: This will decrease the current assets by 8,000 but will also decrease current liabilities by 8,500, resulting in a decrease in the current ratio.
- Sale of goods worth 11,000 (cost 10,000): This will increase the current assets by 11,000 but will not affect current liabilities, leading to an increase in the current ratio.
- Purchase of inventory 20,000 on credit: This will increase current assets by 20,000 but will also increase current liabilities by 20,000, resulting in no change in the current ratio.
Therefore, option C (Sale of goods worth 11,000) will increase the current ratio as it increases current assets without affecting current liabilities.
Effects of each option on the current ratio:
- Bills Receivable of 2,000 endorsed to a creditor is dishonored: This will not have any impact on the current ratio as it does not involve any cash or current assets.
- 8,000 cash collected from debtors of 8,500 is full and final settlement: This will decrease the current assets by 8,000 but will also decrease current liabilities by 8,500, resulting in a decrease in the current ratio.
- Sale of goods worth 11,000 (cost 10,000): This will increase the current assets by 11,000 but will not affect current liabilities, leading to an increase in the current ratio.
- Purchase of inventory 20,000 on credit: This will increase current assets by 20,000 but will also increase current liabilities by 20,000, resulting in no change in the current ratio.
Therefore, option C (Sale of goods worth 11,000) will increase the current ratio as it increases current assets without affecting current liabilities.
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Which of the following will increase the current ratio which is currently 2:1?a)Bills Receivable of 2,000 endorsed to a creditor is dishonored.b) 8,000 cash collected from debtors of 8,500 is full and final settlement.c)Sale of goods worth 11,000 (cost 10,000)d)Purchase of inventory 20,000 on credit.Correct answer is option 'C'. Can you explain this answer?
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Which of the following will increase the current ratio which is currently 2:1?a)Bills Receivable of 2,000 endorsed to a creditor is dishonored.b) 8,000 cash collected from debtors of 8,500 is full and final settlement.c)Sale of goods worth 11,000 (cost 10,000)d)Purchase of inventory 20,000 on credit.Correct answer is option 'C'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Which of the following will increase the current ratio which is currently 2:1?a)Bills Receivable of 2,000 endorsed to a creditor is dishonored.b) 8,000 cash collected from debtors of 8,500 is full and final settlement.c)Sale of goods worth 11,000 (cost 10,000)d)Purchase of inventory 20,000 on credit.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following will increase the current ratio which is currently 2:1?a)Bills Receivable of 2,000 endorsed to a creditor is dishonored.b) 8,000 cash collected from debtors of 8,500 is full and final settlement.c)Sale of goods worth 11,000 (cost 10,000)d)Purchase of inventory 20,000 on credit.Correct answer is option 'C'. Can you explain this answer?.
Which of the following will increase the current ratio which is currently 2:1?a)Bills Receivable of 2,000 endorsed to a creditor is dishonored.b) 8,000 cash collected from debtors of 8,500 is full and final settlement.c)Sale of goods worth 11,000 (cost 10,000)d)Purchase of inventory 20,000 on credit.Correct answer is option 'C'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about Which of the following will increase the current ratio which is currently 2:1?a)Bills Receivable of 2,000 endorsed to a creditor is dishonored.b) 8,000 cash collected from debtors of 8,500 is full and final settlement.c)Sale of goods worth 11,000 (cost 10,000)d)Purchase of inventory 20,000 on credit.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following will increase the current ratio which is currently 2:1?a)Bills Receivable of 2,000 endorsed to a creditor is dishonored.b) 8,000 cash collected from debtors of 8,500 is full and final settlement.c)Sale of goods worth 11,000 (cost 10,000)d)Purchase of inventory 20,000 on credit.Correct answer is option 'C'. Can you explain this answer?.
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