You are given the following information— Cash : ₹ 5,000; Investment in Government Securities : ₹…
The current ratio is 2 : 1. Current assets total ₹ 70,000, comprising ₹ 5,000 cash, ₹ 15,000 government securities, ₹ 20,000 debtors and ₹ 30,000 stock. Current liabilities…
Choose your answer
You are given the following information—
Cash : ₹ 5,000; Investment in Government Securities : ₹ 15,000; Sundry Debtors : ₹ 20,000; Stock : ₹ 30,000; Sundry Creditors : ₹ 11,000; Bills Payable : ₹ 10,000; Outstanding Expenses : ₹ 1,000; Bank Overdraft : ₹ 13,000; and 6% Debentures : ₹ 35,000.
The Current Ratio is—
Answer and explanation
Correct answer C
The current ratio is 2 : 1. Current assets total ₹ 70,000, comprising ₹ 5,000 cash, ₹ 15,000 government securities, ₹ 20,000 debtors and ₹ 30,000 stock. Current liabilities total ₹ 35,000, comprising ₹ 11,000 creditors, ₹ 10,000 bills payable, ₹ 1,000 outstanding expenses and ₹ 13,000 bank overdraft. Thus, the ratio is 70,000 : 35,000 = 2 : 1; debentures are excluded as a long-term liability.
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Uttarakhand SET (USET)