The current ratio of X limited is 1:1. state with reason which of the following transaction would increase, decrease or not change the ratio
1. Included in the trade payables was Bill payable of ?20000 which was met on maturity

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Solution

Dear student
Current ratio = Current Assets/ Current Liabilities

A bill payable of Rs 20000 was met on maturity.
it means reduction in trade payables and reduction in cash, which means reduced current assets and reduced current liabilities but the amount of reduction will be same in both current assets and current liabilities, which will not make any change in the current ratio. Thus the current ratio will remain unchanged.

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Q. (a) From the following information, compute Debt-Equity Ratio:
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Long Term Provisions - 1,00,000
Current Liabilities - 50,000
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(1) Included in the trade payables was a bills payable of Rs 9,000 which was met on maturity.
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(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. The Quick Ratio of a company is 0.8:1. State with reason, whether the following transactions will increase, decrease or not change the Quick Ratio:
(i) Purchase of loose tools for ₹2,000; (ii) Insurance premium paid in advance ₹500; (iii) Sale of goods on credit ₹3,000; (iv) Honoured a bills payable of ₹5,000 on maturity.

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.

The Debt-Equity Ratio of a Company is 1 : 2. Which of the following would increase, decrease or not change it ?

(i) Repayment of Long term Borrowings of Rs. 40,000.

(ii) Purchased a fixed Asset for Rs. 50,000 on long-term deferred payment basis.

(iii) Issued new equity shared of Rs. 75,000.

(iv) Payment of Dividend Payable.

(v) Goods purchased on Credit.

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The current ratio of X limited is 1:1. state with reason which of the following transaction would increase, decrease or not change the ratio 1. Included in the trade payables was Bill payable of ?20000 which was met on maturity

The current ratio of X limited is 1:1. state with reason which of the following transaction would increase, decrease or not change the ratio
1. Included in the trade payables was Bill payable of ?20000 which was met on maturity