Quiz 2 Date of Submission 19th September 2020 Note: Write in your own words. Explain the concept with help of proper examples. Copy/paste from Books, Internet Resources, Journals and Material provided by Course Instructor will lead zero marks. Submit within time. Late submission will also cause zero marking. If students are unable to attempt in MS Word, they can submit handwritten with proper lining and formats within time. Q 1: State the effect of the following on the Current Ratios and Liquidity Ratios: a. Payment of an amount due to a supplier b. Collection of an amount de from the customer c. Sale of goods for cash at normal profit d. Sale of long-term investment e. Purchase of machinery on deferred payment systems, installments being payable half yearly Q2: The following are the extracts from the Financial Statements of Sitara Ltd., Company: Accounts 31st December 2018 31st December 2019 Inventories Rs. 10,000 Rs. 25,000 Accounts Receivable 20,000 20,000 Bills Receivable 10,000 5,000 Advances 2,000 0 Cash in Hand 18,000 15,000 Accounts Payable 25,000 30,000 Bills Payable 15,000 20,000 Bank Overdraft 0 2,000 9% Debentures 200,000 200,000 Sales for the Year 350,000 300,000 Gross Profit 70,000 50,000 With the help of detail given above, calculate for 2018 and 2019 the following: a. Current Ratio b. Liquidity Ratio c. Inventory Turnover Ratio d. Accounts Receivable Turn Ratio