Which of the following transactions makes no change in the current ratio (2:1) of the company?
1) B/R received from trade receivables.
2) Sale of inventories at profit for cash
3) Cash collected from trade receivables
4) Purchase of inventories for cash
5) B/R endorsed to trade payables
6) Sale of fixed asset on long-term deferred payment basis
7) Repayment of long-term loan

1, 3, 4, 6

The correct answer is option 4- 1, 3, 4, 6.

1) B/R received from trade receivables- Not alter (Neither current assets nor current liabilities are affected because there is a conversion of one current asset into another current asset).

2) Sale of inventories at profit for cash- Improve (Current liabilities remain unchanged but current assets are increases by the amount of profit as cash increases).

3) Cash collected from trade receivables- Not alter (Neither current assets nor current liabilities are affected because there is a conversion of one current asset into another current asset).

4) Purchase of inventories for cash- Not alter (Neither current assets nor current liabilities are affected because there is a conversion of one current asset into another current asset).

5) B/R endorsed to trade payables- Improve (Both current assets and current liabilities are decreased by the same amount).

6) Sale of fixed asset on long-term deferred payment basis- Not alter (Neither current assets nor current liabilities are affected because the non current assets are increased as well decreased by the same amount).

7) Repayment of long-term loan- Reduce (Current liabilities remain unchanged but current assets are decreased as cash is reduced).