GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The current ratio of a company is 2 : 1. Which of the following suggestions would not change it?
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Purchase of fixed assets
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Bills receivable dishonoured
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To discount accounts receivable
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To borrow money for a short time on an interest bearing promissory note
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Explanation:
Detailed explanation-1: -Generally, a current ratio of 2:1 is considered ideal, which means that the current assets must be twice the amount of current liabilities.
Detailed explanation-2: -Last, a 2:1 current ratio may not be adequate for a particular company if it is in a risky venture that has fines or lawsuits pending in the short term, but their costs are not yet known.
Detailed explanation-3: -Answer and Explanation: Answer choice B. Cash payment reducing accounts payable.
There is 1 question to complete.