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Home Questions GY4D6XVTCA
Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:
PARTICULARS  AMOUNT (₹)
Income tax paid in advance 30000
Provision for tax 55000
Bank Overdraft 25000
Trade investments 250000
Marketable securities 40000
Tangible fixed asset 600000
Intangible asset 100000
Trade receivables included provision for doubtful debts of ₹20000 200000
Trade payables 120000
Cash balance 80000
Rent payables 10000
Dividend payables 30000
Inventories 390000
8% Debentures matured after 6 years 280000

What will be the current ratio of the company?

Options:

2:1

1:1

4:2

3:1

Correct Answer:

3:1

Explanation:

Current assets= Marktebale sec. + trade rec. + cash bal. + inventories + income tax paid in advance
                     = 40000+180000+80000+390000+30000
                     = ₹720000
Current liabilities= Trade payables + rent payable+ dividend payable +bank overdraft + provision for tax
                         = 120000+10000+30000+25000+55000
                          = ₹240000
CURRENT RATIO =  Current asset/ Current liabilities
                         = 720000/240000
                         = 3:1

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