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Home Questions PTU9BN4Z2H
Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

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

Options:

Only (i) is correct 

Only (ii) is correct

Only (ii) and (iii) are correct

Only (i) and (iii) are correct

Correct Answer:

Only (i) is correct 

Explanation:

The current ratio is 3:2 so assume current assets are ₹300000 and current liabilities are ₹200000. To make it at 2:1 both should be reduced by ₹100000. Only option 1 can make a decrease in both current assets and current liabilities.


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