# Question 10 Chapter 4 of +2-B – T.S. Grewal 12 Class

Question 10 Chapter 4 of +2-B

Current Ratio and Quick Ratio

10. Ratio of Current Assets (Rs. 3,00,000) to Current Liabilities (Rs. 2,00,000) is 1.5 : 1. The accountant of the firm is interested in maintaining a Current
The ratio of 2: 1 by paying off a part of the Current Liabilities. Compute the amount of the Current Liabilities that should that the Current Ratio at the Level of  2:1 may be maintained.

### The solution of Question 10 Chapter 4 of +2-B: –

 Current Ratio = Current Assets = 1.5 Current Liabilities 1

Current Liabilities=Rs. 1,75,000

The company is interested in maintaining Current Ratio 2: 1 by paying off the liability.

∴ Let the liability paid-off by the company = x

 New Current Assets = 3,00,000 – x = 2 2,00,000 – x 1

or,Rs. 4,00,000 – 2x =Rs. 3,00,000 – x
x=Rs. 1,00,000
Therefore, the liability of Rs. 1,00,000 need to be paid off by the company in order to maintain the Current Ratio of 2: 1.

Balance Sheet: Meaning, Format & Examples

Comment if you have any question.

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. 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

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