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Purchase goods ( value 400000) on credit which will paid through year result in:

A- increase current ratio B- no change in current ratio C- decrease current ratio D- decrease working capital

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Question ajoutée par Ahmed kandil , Cost Controller , Battour Holding Cpompany
Date de publication: 2015/03/26
Anil Kumar
par Anil Kumar , Assistant manager A&F , Century Plyboards I Ltd

A is the right answer because credit the given and debit the c.a

Utilisateur supprimé
par Utilisateur supprimé

A- The right answer is that increase current ratio

 

Because when we purchase goods on credit base the entry will be :

 

Purchase Account   Dr

         By Account / Part Name   Cr

 

On the other hand the justification according to accounting rules is that 

 

When we purchase goods on cash / credit base then automatically increase in inventory / in asset . inventory also considered the current asset and purchase on credit base is increase in liability So we considered to accounts payable as current liability. Increase / change in current assets and liabilities is same affect.

 

 

Mohammed Shahid Ullah
par Mohammed Shahid Ullah , Executive Director (Finance) , Coal Power Generation Company Bangladesh Limited

credit purchase goods do not change in current ratio because increase of current assets (inventory) and increase of current Liabilities (Accounts Payable) to be same.

islam abdelhamid
par islam abdelhamid , Senior fixed assets accountant , Etisalat

as it will be paid through the year i will recorded as current liabilities , this will cause to decrease working capital ( current assets - current liabilities )

answer is D 

Ahmed kandil
par Ahmed kandil , Cost Controller , Battour Holding Cpompany

Correct answer is B because increase in inventory equal increase in A/P

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