Question : Which of the following would increase the Quick Ratio if the quick ratio is 1.4: 1 and not change if the quick ratio is 1: 1?
Option 1: Purchase of goods on Credit of 2 months.
Option 2: Sale of goods costing Rs. 20,000 for Rs. 15,000 .
Option 3: Sale of an Office furniture (book value Rs.25,000) for Rs.5,000.
Option 4: B/R drawn on trade receivables for 3 months.
Correct Answer: B/R drawn on trade receivables for 3 months.
Solution : Answer = B/R drawn on trade receivables for 3 months.
Drawing a bill receivable (B/R) on trade receivables for 3 months would increase quick assets without affecting current liabilities, thus raising the Quick Ratio. Both liquid Assets and Current Liabilities are decreased by the same amount.
Hence, the correct option is 4.
