Assertion (A): A current ratio of 2:1 is considered satisfactory as a rule of thumb but it should not be followed blindly. Reason (R): The greatest weakness of current ratio is the possibility of window dressing and mani

CS Executive · Cost and Management Accounting · PYQS · June 2016

Assertion (A): A current ratio of 2:1 is considered satisfactory as a rule of thumb but it should not be followed blindly. Reason (R): The greatest weakness of current ratio is the possibility of window dressing and manipulation. Select the correct answer from the options given below —

(A) Both A and R are true and R is the correct explanation of A

(B) Both A and R are true, but R is not the correct explanation of A

(C) A is true, but R is false

(D) A is false, but R is true.

Answer & Explanation:

Correct Answer: Option (A)

Official answer key: (A).

Topics: Financial Statement Analysis

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Assertion (A): A current ratio of 2:1 is considered satisfactory as a rule of thumb but it should not be followed blindly. Reason (R): The greatest weakness of current ratio is the possibility of window dressing and mani

Answer & Explanation:

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