The current Ratio of the company is 3:2. Accountant wants to maintain it at 2:1.
The following option is available:
(i) He can repay Bills Payable.
(ii) He can purchase goods on credit.
(iii) He can take a short-term loan.
Choose the correct option.

Only (i) is correct 

The correct answer is option 1- Only (i) is correct.

The current ratio is 3:2 so assume current assets are ₹3,00,000 and current liabilities are ₹2,00,000. To make it at 2:1 both should be reduced by ₹1,00,000 or increase only current asset by 1,00,000. Only option 1 can make a decrease in both current assets and current liabilities.

(i) He can repay Bills Payable- It reduced B//P on the current liability side and bank account on the current assets side.
(ii) He can purchase goods on credit- It increased creditors on the current liability side and inventory account on the current assets side.
(iii) He can take a short-term loan - It increased bank loan on the current liability side and bank account on the current assets side.