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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)
answer a is best answer
A/R Account reduce
a-A/R Account reduce.
No effect on current ratio.
option A is correct one............................
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 .
Answer A is the Correct one
Accounts Receivable will decrease
AR will reduce & OCf will improve.....
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.
My answer is a. A/R/account reduce.
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