The current ratio of Y Ltd. is 2:1.State with reason which of the following transactions would (i) increase; (ii) decrease or (iii) not change the ratio.(a) Trade receivables included debtors of Rs. 40,000 which were received.(b) Company purchase furniture of Rs. 45,000. The vendor was paid by issue of equity shares of Rs. 10 each at par.
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a) Trade receivsble received rs 40000
debtors paid 40000 in cash debtors and cash both are current assets so effect is increase inone current assets and decrease is another current asset so ratio will remain same
b) company purchased furniture and issued equity share so furniture is fixed assets and equity capital is part of shareholders fund so no effect on current tatio current ratio will remain same
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