Q. 4 DK Goel Accounting Ratios Solutions Class 12 CBSE (2024-25)

the solutions of Question number 4 of Accounting Ratios chapter 5 of DK Goel Class 12 CBSE (2024-25)

Assuming that the current ratio is 1.5 : 1, state giving reasons, which of the following transactions would (i) improve, (ii) reduce, (iii) not alter the current ratio:-

(1) Realisation of current assets
(2) Payment of current liabilities
(3) B/R dishonoured
(4) Sale of goods at par
(5) Sale of goods at profit
(6) Sale of goods at loss
(7) Purchase of goods for cash
(8) Purchase of goods on credit of 3 months
(9) Sale of furniture for cash
(10) Sale of machinery on a credit of 5 months
(11) Sale of land on long-term deferred payment basis
(12) Purchase of motor car for cash.
(13) Purchase of a building on a credit of 4 months.
(14) Purchase of a plot of land on long-term deferred payment basis.
(15) Repayment of long-term loan which was availed from a bank.
(16) Issue of shares for cash.

[Ans. (1) Not alter; (2) Improve; (3) Not alter; (4) Not alter; (5) Improve; (6) Reduce; (7) Not alter; (8) Reduce; (9) Improve; (10) Improve; (11) Not alter; (12) Reduce; (13) Reduce; (14) Not alter; (15) Reduce; (16) Improve.]

Solution:-