The current ratio is 2 : 1. Which of the following transactions would improve, reduce or change the current ratio? Match List-I with List-II
LIST-I LIST-II A. Payment of unclaimed dividend I. Improve B. Purchase of Machinery against Issue of Shares II. Reduce C. Sale of goods on credit III. Will not be recorded D. Purchased goods on credit IV. Does not Change
Choose the correct answer from the options given below:
The current ratio is 2 : 1. Which of the following transactions would improve, reduce or change the current ratio? Match List-I with List-II
| LIST-I | LIST-II | ||
|---|---|---|---|
| A. | Payment of unclaimed dividend | I. | Improve |
| B. | Purchase of Machinery against Issue of Shares | II. | Reduce |
| C. | Sale of goods on credit | III. | Will not be recorded |
| D. | Purchased goods on credit | IV. | Does not Change |
Choose the correct answer from the options given below:
Solution
✅ Correct Option: 2
Paying unclaimed dividend cuts current assets and current liabilities by the same amount, which raises a ratio already above one, so it improves (I). Machinery bought against shares touches no current item, so it is not recorded for this ratio (III). Credit sale only converts stock into debtors, leaving the ratio unchanged (IV). Credit purchase raises both sides equally and pulls the ratio down (II).
Related questions:
2025: 14 May Shift 1
2022: 8 Aug Shift 2