Collection from book debts converts debtors (a current asset) into cash (another current asset). Total current assets and current liabilities remain unchanged, hence the current ratio is not affected.
Collections from book debts:
CUET UG 2022 — Accountancy Financial Statements
2022mcqmedium
Collections from book debts:
Official previous-year question
Held on 8 Aug 2022 · Verified 13 Jul 2026.
Options
- A
increases current ratio
- B
decreases current ratio
- C
no effect on current ratio
- D
none of the above
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