Multiple Choice Questions on Cash Balance Rs5 000 Trade Payables Rs40 000 Inventory Rs50 000 Trade Receivables Rs65 000 and Prepa........... for UPSC EPFO Exam Preparation

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Multiple Choice Questions

Cash Balance Rs5 000 Trade Payables Rs40 000 Inventory Rs50 000 Trade Receivables Rs65 000 and Prepa...........

General Accounting Principles Ratio analysis 
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    Cash Balance Rs5,000; Trade Payables Rs40,000; Inventory Rs50,000; Trade Receivables Rs65,000 and Prepaid Expenses are Rs10,000. Liquid Ratio will be

    1.75 : 1

    Correct Answer

    2 : 1

    Incorrect Answer

    3.25 : 1

    Incorrect Answer

    3:1

    Incorrect Answer
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    Explanation:

    Cash Balance Rs5,000; Inventory Rs50,000;Trade Receivables Rs65,000; Prepaid Expenses are Rs10,000.

    Trade Payables Rs40,000;

    liquid assets: Rs. 5,000+ Rs.65,000=Rs. 70,000

    current liabilities= Rs.40,000

    liquid assets/current liabilities

    Rs.70,000/ Rs.40,000

    =1.75:1

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    Let's Discuss

    Sunarika Mehta

    liquid assets = current assets - stock - prepaid expenses so why u took only current assets

    0 0 reply

    Ankur sharma

    Liquid assets are defined as all Current Assets except Prepaid Expense & Stock. So if current assets are given in the question, we use formula mentioned by you. Otherwise you can add all current assets except prepaid expense & stock ( as done in the question). I hope its clear

    0 0 reply
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