Accounting Multiple Choice Question – 30 August 2017

Accounting

Which of the following current assets should be ignored when calculating the liquid capital ratio?

Select ONE answer:

  1. Cash and cash equivalents
  2. Inventory
  3. Other receivables
  4. Trade receivables
  5. Prepayments

What is the definition of inventory?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Accounting KS5 classes.

The answer is 2 – This ratio is an indicator of a company’s short-term liquidity. The ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. For this reason, the ratio excludes inventories from current assets, and is calculated as follows: Ratio = (current assets – inventories) / current liabilities, or (cash and equivalents + marketable securities + accounts receivable) / current liabilities

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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