Multiple Choice Questions on Current liabilities of a company were Rs 2 00 000 and its current ratio was 2 5 1 After this the com........... for Commerce 12th Preparation

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Multiple Choice Questions

Current liabilities of a company were Rs 2 00 000 and its current ratio was 2 5 1 After this the com...........

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    Current liabilities of a company were Rs 2,00,000 and its current ratio was 2.5 : 1. After this the company paid Rs. 1,00,000 to a trade payable. The current ratio after the payment will be :

    2 : 1

    Incorrect Answer

    4 : 1

    Correct Answer

    5 : 1

    Incorrect Answer

    None of the above

    Incorrect Answer
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    Explanation:

    - Current liabilities are Rs 2,00,000 with a current ratio of 2.5:1, meaning current assets are Rs 5,00,000 (2.5 x Rs 2,00,000).

    - Paying Rs 1,00,000 to a trade payable reduces current liabilities to Rs 1,00,000.

    - Current assets are also reduced by Rs 1,00,000, resulting in Rs 4,00,000 of current assets.

    - The new current ratio is current assets (Rs 4,00,000) divided by current liabilities (Rs 1,00,000), which equals 4:1.

    Correct Answer: 4 : 1

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