Accounting Multiple Choice Question – 28 April 2018

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Wood Sparrow Ltd has provided a list of its assets and liabilities as at 31 December 2017 as follows:

  • Long-Term Assets £0.8M
  • Inventory £0.7M
  • Accounts Receivables £0.7M
  • Bank Account £0.4M
  • Cash £0.1M
  • Accounts Payable £0.9M
  • Long-term Bank Loan £2M
  • Reserves  £0.5M
  • Share Capital £0.5M
  • Revenue  £10.8M
  • Cost-of-Sales  £9M
  • Net Profit Margin  £1M
  • Purchases  £5.1M

What is Wood Sparrow’s Liquidity capital ratio (acid test or quick ratio)?

Select ONE answer:

  1. 1.43
  2. 1.40
  3. 2.11
  4. 3.94
  5. 1.33

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 5 – (£0.7M + £0.4M + £0.1M) / £0.9M = 1.33

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