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Question 16 Chapter 4 of +2-B
Current Ratio and Quick Ratio
16. Quick Assets Rs. 1,50,000; Inventories (Stock) 40,000; Prepaid Expenses Rs. 10,000; Working Capital Rs. 1,20,000.Calculate Current Ratio.
| Quick Assets | = | Rs.1,50,000 |
| Inventory | = | Rs.40,000 |
| Prepaid Expenses | = | Rs.10,000 |
| Current Assets | = | Quick Assets + Inventory + Prepaid Expenses |
| = | Rs.1,50,000 + Rs.40,000 + Rs.10,000 | |
| = | Rs.2,00,000 |
| Working Capital | = | Current Assets - Current Liabilities |
| Rs.1,20,000 | = | Rs.2,00,000 - Current Liabilities |
| Current Liabilities | = | Rs.80,000 |
| Current Ratio | = | Current Assets |
| Current Liabilities |
| = | 2,00,000 |
| 80,000 |
Quick Ratio or Liquid Ratio=2.5 : 1
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Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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