Question

1. Current ratio = 2 :1
Quick Ratio = 1 :1
Stock Rs.20,000
Prepaid Expenses Rs.10,000
Current Assets, Current Liabilities and Quick Assets

Answer 1

Answer:

Explanation:

The question will be solved in terms of Mathematical way.

                            Current Assets

    Current Ratio= --------------------

                             Current liabilities

Considering factor as x

Means = 2x : 1x =Current Assets = 2 Current Liabilities

=======================================

                                Current Assets -Stock-Prepaid

           Quick Ratio=  -------------------------------------------

                                     Current Liabilities

Means Current Assets-Stock -Prepaid = Current Liabilities

Putting values in the equation

Current Assets -20000-10000=Current Liabilities

2 current liabilities -30000=current liabilities

-30000=-2current liabilities -current liabilities

30000=Current liabilities

60000=Current Assets

Now what are quick assets

Quick Assets = These are those Assets that can quickly be converted to cash.

Quick Assets = Current Assets -Inventories-Prepaid expense

                       =60000-20000-10000

                       =30000