Financial and Management Accounting

1: Identify the item that is not taken into account in computing the current ratio.
A.

Bank overdraft

B.

Bank

C.

Stock

D.

Cash

 

Answer : A

Explanation :

Jasbir Singh said: (11:41pm on Tuesday 17th November 2015)
All the options are considered for computing the current ratio
Monika said: (5:11pm on Friday 4th December 2015)
Bank overdraft is current liability so it will be consider in current ratio.
Jasbir Singh said: (12:26am on Sunday 26th June 2016)
Current Ratio=Current Assets/Current liabilitiesC.A=cash in hand cash at bank b/r short term investments debtor stock prepaid expensesC.L=Bank overdraft b/p creditors pro.for taxation proposed dividend unclaimed dividend outstanding exp loans payable within a year
Tanzeem Sheikh said: (11:03am on Friday 6th January 2017)
Bank OD is current liblitiy so it will consider
Santhosh said: (5:24pm on Saturday 13th January 2018)
The above answers are right that bank over draft is a current liability it will be considered. Maybe the question is about quick ratio. At that time stock will be the answer.
basavaraj pattar said: (7:20am on Friday 19th January 2018)
bank od some times fixed libilties when od is more then one year so bank od is the currect option

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Option: A

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