Current Assets

Inventories raw materials, Finished goods, work in progress and stores spares
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 cu
Deposits with 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
and stores spares, loose tools

QA
QA
QA
QA
QA

t be treated as current assets

QL
QL
QL
QL
QL
QL

QL
QL
 P
cash and bank 1,000
sundry debtors 32,000
Bills receivable 10,000
stock 36,000
Advance and prepared expenses 1,000
Total current assets 80,000
Bills Payable 2,000
sundry creditors 32,000
provision for taxation 2,600
unclaimed dividend 900
proposed dividend 2,000
interest accured on loan 500
Total current Liabilities 40,000
Working capital 40,000

Current ratio
Total current Assets 80,000
Total current liabilities 40,000

current ratio 2.00

Standard Ratio 2:1

Quick ratio
Quick assets 43,000
Quick Liabilities 40,000

1.08
Standard Ratio 1:1
Companies
Q R
2,000 2,800
20,000 60,000
7,000 11,200
10,000 64,000
1,000 2,000
40,000 140,000
800 6,000
6,000 70,000
3,000 4,000
2,500
6,000
200 1,500
10,000 90,000
30,000 50,000

40,000 140,000
10,000 90,000

4.00 1.56
2:1 2:1
 29,000 74,000
10,000 90,000

2.90 0.82
1:1 1:1

-
Information given for X Ltd

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

50,000

100,000

400,000
200,000
1,300,000
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