Accounting Multiple Choice Question – 18 February 2019

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

Accounting

A sole trader’s capital at any particular date is equal to ……….. ?

A firm which sells exclusively on credit has the four current assets listed below. Which of the lists shows these assets in decreasing order of liquidity i.e. starting on the left with the most liquid (most readily convertible into cash) of the four and ending on the right with the least liquid (least readily convertible into cash)?

Select ONE answer:

  1. Cash, Stock, Debtors, Money in a bank current account
  2. Money in a bank current account, Cash, Debtors, Stock
  3. Cash, Money in a bank current account, Stock, Debtors
  4. Cash, Money in a bank current account, Debtors, Stock

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

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

This multiple choice question is suitable for Accounting KS5 classes.

The answer is 4

  • If a firm is selling exclusively on credit, its stock will be sold on credit, thus becoming debtors. When money is received from debtors, it will be lodged, thereby increasing the bank balance. Cash, by definition, is the most liquid asset.

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Author: stuart001uk2014

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

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