AboutArthur Naman Expertise General accounting and bookkeeping questions. How to do monthly bookkeeping, how to prepare financial reports. How to reconcile accounts.
I cannot answer questions pertaining to pension or retirement planning.
This is not a forum to have homework answered. Please do your own homework.
Experience 30 years' experience doing tax and accounting work
Education/Credentials MPA from Univ. of Texas at Austin, MBA Golden Gate Univ, San Francisco CA
Question QUESTION: Hello Sir I want to ask about Current ratios.
Sir, what happened when we use cash i.e current assets to pay the account payable i.e current liabilities?
Cash would be decrease but in good sense liabilities also decrease ... is that mean it won't effect the current ratio value?
Thanks
Take care!
ANSWER: I believe your conclusion would be correct.
---------- FOLLOW-UP ----------
QUESTION: Sir, I need help to clear this point.
What happened when we use cash to pay the account payable liabilities?
Thanks for the reply
Answer Well, write down an example of current assets and current liabilities. Then reduce current assets by an amount used to reduce current liabilities.
What is the current ratio before and after the payment is made and current liabilities reduced accordingly.
