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<p><strong>(a)Issue of Debentures to buy Stock,</strong></p> <p><strong> (b)Issue of Debentures to pay Creditors,</strong></p> <p><strong>(c)Sale of Investment to pay Creditors,</strong></p> <p><strong>(d)Avail Bank Overdraft to buy Machine. </strong></p>
Answer: D= Avail Bank Overdraft to buy Machine
(a)Issue of Debentures to buy Stock,
Because it is related to long term
(b) Issue of Debentures to pay Creditors
one of the ways to improve the current ratio is to take a long-term loan for all of the current debt. By doing this, the current liabilities are completed eliminated which results in a terrific current asset ratio. The debt; however, is still there, but will be paid over a longer time span.
Issue of Debentures to buy Stock.
This affects only equity and long term liabilities so doesn't have any impact on current ratio.
perfect answer is A if you go for D and unused amount of O/D may be possible but prudency isUse O/D ad and when required as it carries interest which also increase your o/d namely C/L
Option A,
Because that option does not involve any current asset or current liability
ANSWER D
