Teaching UGC NET Mock Test Series 2025 (Paper 1 & 2) Accountancy Financial Statement Analysis Ratio analysis
Given below are two statements, one is labelled as Assertion (A) and the other is labelled as Reason (R)
Assertion A: Quick ratio is a more penetrating test of liquidity than the current ratio, yet a high quick ratio does not necessarily imply sound liquidity.
Reason R: A company with a high value of quick ratio can suffer from a shortage of funds if it has slow-paying, doubtful and long-duration outstanding debtors.
In light of the above statements, choose the most appropriate answer from the options given below
1
Both A and R are correct, and R is the correct explanation of A
2
Both A and R are correct, but R is not the correct explanation of A
3
A is correct but R is not correct
4
A is not correct but R is correct