Question 26 Chapter 4 of +2-B - T.S. Grewal 12 Class

Question 26 Chapter 4 of +2-B

26. 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:
Purchase of goods for cash;
Purchase of goods on credit;
Sale of goods (costing Rs. 10,000) for Rs. 10,000;
Sale of goods (costing Rs. 10,000) for Rs. 11,000;
Cash received from Trade Receivables.

The solution of Question 26 Chapter 4 of +2-B: -

Transactions	Impact on Current Ratio	Reason
(a) Purchase of goods for cash.	Reduce	There is a decrease in the amount of Cash (Current Assets) and increase in, Inventory, Liquid Assets are decreased by payment of goods.
(b) Purchase of goods on credit.	Reduce	The is Increase in the number of Current Liabilities and Liquid Assets remain the same.
(c) Sale of goods (costing Rs. 10,000) for Rs. 10,000.	Improve	Increase in Quick Assets in the form of either in cash or debtor. This results in no change in current liabilities.
(d) Sale of goods (costing Rs. 10,000) for Rs. 11,000	No Change	Increase in Quick Assets in the form of either in cash or debtor. This results in no change in current liabilities.
(e) Cash received from Trade Receivables.	No Change	With this transaction, the Quick Assets value decrease beside this also decrease in Quick Assets in Form of Debtors.

 

 

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Also, Check out the solved question of previous Chapters: -

T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)

• Chapter No. 1 - Financial Statement of Not-For-Profit Organisations
• Chapter No. 2 - Accounting for Partnership Firms - Fundamentals
• Chapter No. 3 - Goodwill: Nature and Valuation
• Chapter No. 4 - Change in Profit-Sharing Ratio Among the Existing Partners
• Chapter No. 5 - Admission of a Partner
• Chapter No. 6 - Retirement/Death of a Partner
• Chapter No. 7 - Dissolution of a Partnership Firm

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 8 - Company Accounts -  Accounting for Share Capital
• Chapter No. 9 - Company Accounts - Issue of Debentures
• Chapter No. 10 - Redemption of Debentures

T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)

• Chapter No. 1 - Financial Statements of a Company
• Chapter No. 2 - Financial Statement Analysis 
• Chapter No. 3 - Tools of Financial Statement Analysis - Comparative Statements and Common- Size Statements
• Chapter No. 4 - Accounting Ratios
• Chapter No. 5 - Cash Flow Statement

Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication