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If a company collects money from A/R, which of the following is correct? a- A/R Account reduce B-current Ratio increase C-current ratio decrease?

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تم إضافة السؤال من قبل ryad abdalla , chief of accounts , Evntoo
تاريخ النشر: 2015/11/04
SREEDEVI SUNILKUMAR
من قبل SREEDEVI SUNILKUMAR , Business finance officer , Emirates Airline

a. Accounts receivable Account reduce 

Haytham Ref'at Khouli
من قبل Haytham Ref'at Khouli , Senior Financial Manager , ESNAD for Companies Management

The Answer is (A) - A/R account Reduce.

 

Transfer the money from A/R account  to cash or bank accounts will not affect the current ratio.

current ratio = current assets / current liabilities.

the current assets including cash and A/R, so, the sum of them always the same !! 

 

another point;

collecting money from A/R mean you credited the A/R, so, you reduce the A/R.

the entry as follow:

Dr. Cash (Increase the cash by the amount)

Cr. A/R ( Reduce the A/R by the same amount)

ryad abdalla
من قبل ryad abdalla , chief of accounts , Evntoo

answer a  is best answer

A/R Account reduce

Mubeen Ansari
من قبل Mubeen Ansari , General Manager Accounts and Administration , Balochistan Engineering Works Limited

a-A/R Account reduce.

No effect on current ratio.

Sara Naeem
من قبل Sara Naeem , Trainee Finance officer , Wah Brass Mill

option A is correct one............................

مستخدم محذوف‎
من قبل مستخدم محذوف‎

Accounts Receivable will decrease

مستخدم محذوف‎
من قبل مستخدم محذوف‎

Current ratio will not affect because the current assets will be the same by increasing cash and decreasing accounts receivable . So option  A  is right .

mohamed Hakim CMA CPA Candidate
من قبل mohamed Hakim CMA CPA Candidate , Accounting Manager , Andersen saudi arabia

Answer A is the Correct one

 

Accounts Receivable will decrease

 

Bishan Jamwal
من قبل Bishan Jamwal , Finance Manager , G4S Qatar WLL

AR will reduce & OCf will improve.....

ARIF MAHMUD
من قبل ARIF MAHMUD , Accounts & Admin Executive , NewVision Solutions Ltd.

From my point of understanding I think the answer is (a) A/R Account Reduce, as long as the current ration is equals (Total Current Asset/Total Current Liability) the changes in the ratio will not change because the A/R remains current asset.

Michael Lagunday
من قبل Michael Lagunday , Accounts Assistant , Invest Group Overseas LLC

My answer is a. A/R/account reduce.

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