33.Quick Ratio of Roxy Traders is 0.8 : 1. State with reasons whether the following transactions will increase , decrease or will have no change on the ratio.
a) Goods purchased on Credit
b) Outstanding Expenses paid
c) Sale of Fixed Assets a 20% loss
d) Issue of Debentures at Premium to Vendors
Solution :-
a) Ratio will decrease because Current Liabilities (Trade Payables) will increase and there is no change in Quick Assets.
b) Ratio will decrease as both Quick Assets (Cash) and Current Liabilities (Outstanding Expenses) will decrease.
c) Ratio will increase as Current Assets (Cash and Cash Equivalents) will increase.
d) No change as no impact on Quick Assets and Current Liabilities.