Assuming that the current ratio is 2 1 Cash paid against Bills Payable would ........

General Accounting Principles Ratio analysis

Assuming that the current ratio is 2 : 1, Cash paid against Bills Payable would:

increase current ratio

Decrease Current ratio

have no effect on Current ratio

decrease gross profit ratio

Bill payable will decrease both current assets(cash) and current liabilities (bill payables) . Hence current ratio will increase.

Lets assume

CA = 20,000 , CL= 10,000 payment 2,000 is made against bills payable

CR= (20,000-2,000)/(10,000-2,000) = 18,000/8,000 = 2.25 : 1

Submit Error

when both will decrease then ratio will remain same

Ankur sharma

According to question ratio is 2:1, you cannot take CA & CL equal.

LOVE JAJODIA

But when CA and CL both are 20000 and each decrease by 2000 then ratio will remain same

Ankur sharma

Please check explanation now, I hope you will understand.