Question 13 Chapter 4 of +2-B
Table of Contents
Current Ratio and Quick Ratio
13. State giving reason, whether the current Ratio will improve or decline or will have no effect in each of the following transaction if Current Ratio is
2 : 1:
- Cash paid to Trade Payables.
- Bills Payable discharged.
- Bills Receivable endorsed to creditors.
- Payment of final Dividend already declared.
- Purchase of Stock-in-Trade on credit.
- Bills Receivable endorsed to creditors to a Credit dishonoured.
- Purchase of Stock-in-Trade for cash.
- Sale of Fixed Assets (Book Value of Rs. 50,000 for Rs. 45,000)
- Sale of Fixed Assets (Book Value of Rs. 50,000 for Rs. 60,000)
The solution of Question 13 Chapter 4 of +2-B: –
| Comparative Balance Sheet of Sun Ltd. |
||
|
Transactions |
Impact on Current Ratio |
Reason |
| (a) Cash Paid to Trade Payables. | Improve | The Result of this Transaction is Positive effect Because There is a decrease in the number of Current Assets and Current liabilities in the same Figure. |
| (b) Bills Payable discharged. | Improve | The Result of this Transaction is Positive effect Because There is a decrease in the number of Current Assets and Current liabilities in the same Figure. |
| (c) Bills Receivable endorsed to creditors. | Improve | There is an amount of Bill Receivable (Current Assets) is Decline equally to the Number of Creditors (Current liability). |
| (d)Payment of final Dividend already declared | Improve | There is a number of Current Assets are Decline equally to the Amount of Current liability. |
| (e) Purchase of Stock-in-Trade on credit. | Decline | With this transaction, the Current Assets value increase besides this current liability also increases. |
| (f) Bills Receivable endorsed to a creditor to a Credit dishonoured. | Decline | There is an increase in the number of Current Assets and Current liabilities with the same Figures. |
| (g) Purchase of Stock-in-Trade for cash. |
decline | The amount of Current Asset is Increased but the cash (Current Assets) decreases with the equal Amount. |
| (h) Sale of Fixed Assets (Book Value of Rs. 50,000 for Rs. 45,000) | Improve | There is the number of Current Assets is increased without any change Amount of Current liability. |
| (i) Sale of Fixed Assets (Book Value of Rs. 50,000 for Rs. 60,000) | Improve | The amount of Current Assets is increased without any change Amount of Current liability. |
Balance Sheet: Meaning, Format & Examples
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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 Web
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
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