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mediumMCQCUET Accountancy 2022 8 Aug Shift 22026Accountancy
1 mark

Collections from book debts:

  1. A
    increases current ratio
  2. B
    decreases current ratio
  3. C
    no effect on current ratio
  4. D
    none of the above

Solution & Step-by-step Explanation

Collecting from debtors converts one current asset (debtors) into another current asset (cash) by the same amount, thus leaving total current assets and the current ratio unchanged.

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Collections from book debts:
A
increases current ratio
B
decreases current ratio
C
no effect on current ratio
D
none of the above

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