CBSE Class 12-commerce Answered
In accounting ratio que no 14 why condition 1 and 2 given different reason of same transaction
Asked by Smitakhadayate20 | 30 Sep, 2018, 03:50: PM
Expert Answer
The reason of difference in change recorded with the same transactions recorded under varied circumstances is because of the incidence of change that is recorded. If Current Ratio is 1 : 1, it means Current Assets and Current Liabilities have similar effect on the ratio. However, if Current Ratio is 0.8 : 1, it means 80% Current Assets are there as compared to 100% liabilities. Now, as clear from varies transactions posted in the question, if a transaction affects both current assets and liabilities with same amount then because of this current scenario or incidence, the change would be different.
Answered by | 01 Oct, 2018, 09:12: AM
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