Question

A Company's Current Assets are 8,00,000 and its current liabilities are
74,00,000. Subsequently, it purchased goods for 1,00,000 on credit. Current
ratio will be .
(A) 2:1 (B) 2.25 1
(C) 1.8:1 (D) 1.6:1

Answer 1

Answer:

Current assets = 800000

Current liabilities = 400000 + 100000= 500000

Curent ratio = current assets / current liabilities

= 800000/ 500000

= 1.6/ 1

Correct answer is option D

Answer 2

(D) 1.6 : 1

Explanation:

Current assets are those assets which only come in use for a short time which is usually one year. current liabilities are those liabilities which has to be paid in a short time which is usually one year.

given, current assets ( CA ) = 8,00,000

          current liabilities ( CL ) = 4,00,000

and, goods purchased on credit = 1,00,000 will be added in current liabilities.

so, increased current liabilities = 4,00,000 + 1,00,000

                                                   = 5,00,000

now, current ratio = current assets / current liabilities

                              = 8,00,000 / 5,00,000

                              = 1.6 / 1   or   1.6 : 1