Question

The Current Ratio of a company is 1.8 : 1 and its Quick Ratio is 1.6 : 1.

From the following transactions, pick out the transaction which involves an increase in both the Current Ratio and Quick Ratio:

Options

• Goods worth ₹ 10,000 sold at a loss of ₹ 2,000.

• Insurance premium of ₹ 3,000 paid in advance.

• Plant and Machinery purchased for ₹ 9,000.

• Bills Payable of ₹ 2,000 honoured on the due date.

Answer 1

Bills Payable of ₹ 2,000 honoured on the due date.