Question

which one of the following items is not taken into account while computing current ratio?
1)sundry creditors
2)sundry debtors
3)furniture
4)bank overdraft

Answer 1

furniture is the correct answer

Answer 2

Answer:

(3) Furniture.

Explanation:

Current ratio Formula:

Current ratio = Current assets/ Current liabilities

• Current assets comprise inventories of company, sundry debtors, cash and bank balances of organization , amount receivables, loans and advances, disposable investments etc.
• Current liabilities comprise sundry creditors, short term firm loans,  overdraft taken through bank , cash credit, provisions, outstanding expenses etc.

Here:

Furniture is a fixed asset and it should not be included in current assets. therefore while calculating the current ratio furniture is not taken into account.          

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