Which of the following transaction will make no change in the current ratio (2:1) of the company?

A) Cash collected from trade receivables
B) B/R received from trade receivables
C) B/R endorsed to trade payables
D) B/R dishonoured
E) Sale of inventories at par for cash
F) Sale of investments at profit for cash
G) Sale of stock at loss for cash

Choose the correct answer from the options given below.

ABDE

The correct answer is option 4- ABDE.

A) Cash collected from trade receivables - NO CHANGE-Both current assets and current liabilities are not affected because one current asset is converted into other current asset.

B) B/R received from debtors - NO CHANGE-Both current assets and current liabilities are not affected because one current asset is converted into other current asset.

C) B/R endorsed to trade payables -INCREASE-Both current assets and current liabilities are decreased by same amount. Decrease same amount on both side will increase the ratio.

D) B/R dishonoured- NO CHANGE- Both current assets and current liabilities are not affected because one current asset is converted into other current asset.

E) Sale of inventories at par for cash- NO CHANGE- Both current assets and current liabilities are not affected because one current asset is converted into other current asset.

F) Sale of investments at profit for cash- INCREASE-Current assets are increased by the amount of profit and current liabilities are not affected. So, ratio will increase.

G) Sale of stock at loss for cash-DECREASE-Current assets are decreased by the amount of loss and current liabilities are not affected. So, ratio will decrease.