The current ratio of a company is 2.5:1. Which of the following transactions would not change it?

Payment to trade creditors

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Selling machinery for cash

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Purchase of goods on credit

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Issue of equity shares

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Solution

The correct option is D
Issue of equity shares

Issue of prospectus wouldn't change the current ratio. In all other cases, either the current assets or the current liabilities change.

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Similar questions

Q. State giving reasons, which of the following transactions would improve, reduce or not change the Current Ratio, if Current Ratio of a company is (i) 1:1; or (ii) 0.8:1:
(a) Cash paid to Trade Payables.
(b) Purchase of Stock-in-Trade on credit.
(c) Purchase of Stock-in-Trade for cash.
(d) Payment of Dividend payable.
(e) Bills Payable discharged.
(f) Bills Receivable endorsed to a Creditor.
(g) Bills Receivable endorsed to a Creditor dishonoured.

Q. Which of the following transactions will change the current ratio?

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

(d) Sale of goods for Rs. 11,000 (Cost Rs 10,000)

(e) Redemption of Debentures.

Q. Quick Ratio of a company is 2:1. State giving reasons, which of the following transactions would (i) improve, (ii) reduce, (iii) Not change the Quick Ratio:
(a) Purchase of goods for cash; (b) Purchase of goods on credit; (c) Sale of goods (costing ₹10,000) for ₹10,000; (d) Sale of goods (costing ₹10,000) for ₹11,000; (e) Cash received from Trade Receivables.

Q. Which of the following transaction change the current ratio?

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The current ratio of a company is 2.5:1. Which of the following transactions would not change it?

The correct option is D Issue of equity shares Issue of prospectus wouldn't change the current ratio. In all other cases, either the current assets or the current liabilities change.

The correct option is D
Issue of equity shares

Issue of prospectus wouldn't change the current ratio. In all other cases, either the current assets or the current liabilities change.