Multiple Choice Questions on A Company rsquo s Current Ratio is 3 1 Current Liabilities are Rs 2 50 000 Inventory is Rs 60 000 an........... for UPSC EPFO Exam Preparation

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Multiple Choice Questions

A Company rsquo s Current Ratio is 3 1 Current Liabilities are Rs 2 50 000 Inventory is Rs 60 000 an...........

General Accounting Principles Ratio analysis 
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    A Company’s Current Ratio is 3 : 1; Current Liabilities are Rs 2,50,000; Inventory is Rs 60,000 and Prepaid Expenses are Rs 5,000. Its Liquid Assets will be :

    Rs 6,90,000

    Incorrect Answer

    Rs 6,95,000

    Incorrect Answer

    Rs 6,85,000

    Correct Answer

    Rs 8,15,000

    Incorrect Answer
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    Explanation:
    Q. Current Ratio is 3 : 1; Current Liabilities are Rs 2,50,000; Inventory is Rs 60,000 and Prepaid Expenses are Rs 5,000
     
     
    liquid assets= current assets - inventory - prepaid expenses= Rs7,50,000(WN1)- Rs.60,000-Rs.5,000=Rs.6,85,000 (answer)
     
    Working Note 1 for current assets
    Current assets  = liquid Assets/ current liabilities
    current Assets = current ratio 
    Current liabilities   
      
              X          =3
     Rs. 2,50,000   1
      
    current assets=Rs.2,50,000 * 3 =Rs.7,50,000
     

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