Which transaction causes a decrease in the Current Ratio and an increase in the Quick Ratio?
Answer & explanation
Correct answer: option 4
Quick ratio can increase if there is no decrease in quick assets which is possible with option 3 and 4.
Current ratio can decrease if there is a decrease in current asset which can be possible with option 4 as a loss will make the current asset to reduce( e.g sale of goods of ₹10000 at a loss of ₹8000, will reduce the current asset with ₹2000).