Current Assets

Inventories raw materials, Finished goods, work in progress and stores spares, loose tools
deposits given
Advance given
prepaid expenses and accrued income
income accrued but not due
income due but not received
advance tax
TDS (Dr balance)
sundry debtors after deducting provisions
short term loans Given
cash on hand and bank balance
bills receivable
marketable investments and short term securities

Deposits given for supply of gas, electricity, water should not be treated as current assets
Deposits with excise, customs, port trust are current assets
Inventory and prepaid are deferred assets

Current Liabilities
Sundry creditors
Bills Payable
outstanding expenses
unclaimed dividend
interest accrued but not due on secured and unsecured loans
Advances received
Income received in advance
provision for taxation
proposed dividend
Bank overdraft
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 Companies
P Q R
cash and bank 1,000 2,000 2,800
sundry debtors 32,000 20,000 60,000
Bills receivable 10,000 7,000 11,200
stock 36,000 10,000 64,000
Advance and prepared expenses 1,000 1,000 2,000
Total current assets 80,000 40,000 140,000

Bills Payable 2,000 800 6,000

sundry creditors 32,000 6,000 70,000
provision for taxation 2,600 3,000 4,000
unclaimed dividend 900 2,500
proposed dividend 2,000 6,000
interest accured on loan 500 200 1,500
Total current Liabilities 40,000 10,000 90,000
Working capital 40,000 30,000 50,000

Current ratio
Total current Assets 80,000 40,000 140,000
Total current liabilities 40,000 10,000 90,000

current ratio 2 4 2
Standard Ratio 2:1 2:1 2:1

Quick ratio

Quick assets 43,000 29,000 74,000

Quick Liabilities 40,000 10,000 90,000
 1 3 1
Standard Ratio 1:1 1:1 1:1
Information given for X Ltd

Particulars Debit Credit

Equity Share capital 300,000
General Reserve 200,000
Profit and loss account 50,000
marketable securities 50,000
stock 100,000
debentures 50,000
sundry debtors 300,000
bank 50,000
Investments 100,000
Bank overdraft 100,000
Fixed assets 700,000
sundry creditors 400,000
bills payables 200,000
1,300,000 1,300,000

Calculate current ratio

Current ratio
Total current Assets 500,000
Total current liabilities 700,000

Current ratio 0.71

standard ratio 2:1

Poor short term solvency
Information given for L Ltd

Particulars Debit Credit

Equity Share capital 100,000
Preference shares 50,000
General Reserve 25,000
Surplus 5,000
Bills receivable 2,000
stock 22,000
debentures 20,000
sundry debtors 50,000
bank 12,000
Prepaid expenses 1,000
outstanding expenses 5,000
Land 50,000
Building 50,000
Plant and Machinery 60,000
Furniture 2,000
Tax provision 15,000
sundry creditors 25,000
bills payables 4,000
249,000 249,000

Current ratio
Total current Assets 87,000
Total current liabilities 49,000

Current ratio 1.78

standard ratio 2:1

Quick ratio

Quick assets 64,000

Quick Liabilities 49,000

Quick ratio 1.3

Standard Ratio 1:1