Transactions altering current assets without affecting liabilities

Steps:

• Recall current ratio formula: current assets ÷ current liabilities.
• Assess each option's impact on current assets (numerator) or liabilities (denominator).
• Identify transactions causing net change in current assets.
• Select option reducing current assets via payment for non-current asset.

Why B is correct:

• Purchasing machinery by cheque decreases current assets (cash outflow) while increasing non-current assets, reducing the numerator and thus the ratio (per current ratio formula).

Why the others are wrong:

• A: Buying inventory with cash swaps one current asset (cash) for another (inventory), leaving current assets unchanged.
• C: Collecting cash from receivables swaps one current asset (receivables) for another (cash), leaving current assets unchanged.
• D: Revaluing non-current assets affects only non-current items, not current assets or liabilities.

Final answer: B