(i) A company had Current Assets of ₹3,00,000 and Current Liabilities of ₹1,50,000, having a Current Ratio of 2:1.
What will be the company’s revised Current Ratio after it collects ₹20,000 cash from its debtors of ₹25,000, the remaining debtors being bad?

(a) 2.56:1
(b) 2.03:1
(c) 2.13:1
(d) 1.97:1

(ii) During the year 2021-22, SM Ltd. issued 10,000, 10% Debentures of ₹100 each at a discount of 10% to be redeemed after three years. The company had a balance of ₹60,000 in its Securities Premium Reserve.

What amount will be added under Operating Activities as Discount on issue of Debentures written off in the Cash Flow Statement of SM Ltd. for the year 2021-22?

(a) ₹10,00,000
(b) ₹60,000
(c) ₹1,00,000
(d) ₹40,000

(iii) State with reason whether Provision for Doubtful Debts is subtracted from Trade Receivables while computing Current Ratio.

(iv) While preparing its Cash Flow Statement, will a co mpany consider an increase in its Bank Overdraft as an Operating Activity or as a Financing Activity?

(v) What is meant by inter-firm analysis?

Solution

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