State, giving reason, whether the Current Ratio will improve or decline or will have no effect in each of the following transactions if Current Ratio is 2 : 1.

State, giving reason, whether the Current Ratio will improve or decline or will have no effect in each of the following transactions if Current Ratio is 2 : 1.

(a) Cash paid to Trade Payables.

(b) Bills Payable discharged.

(c) Bills Receivable endorsed to a creditor.

(d) Payment of final Dividend already declared.

(e) Purchase of Stock-in-Trade on credit.

(f) Bills Receivable endorsed to a Creditor dishonoured.

(g) Purchase of Stock-in-Trade for cash.

(h) Sale of Fixed Assets (Book Value of ₹ 50,000) for ₹ 45,000.

(i) Sale of Fixed Assets (Book Value of ₹ 50,000) for ₹ 60,000.

[Ans.: (a) Improve; (b) Improve; (c) Improve; (d) Improve; (e) Decline; (f) Decline; (g) No effect; (h) Improve; (i) Improve.]