Accounting Multiple Choice Question – 16 November 2020

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

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The table shows an extract from a company’s accounts for the year ended 31 December 2019.

What do these figures show about the company’s liquidity?

Select ONE answer:

  1. It declined in year 2, but no further in year 3. 
  2. It declined in year 2, but then improved in year 3. 
  3. It has continually declined over the 3 years. 
  4. It has continually improved over the 3 years.

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 3

  1. Not correct
  2. Not correct
  3. Correct – Year 1 (£44k + £204k / £126k + £34k) = 1.55, Year 2 (£58k + £182k / £152k + £46k) = 1.21, Year 3 (£56k + £162k / £150k + £44k) = 1.12
  4. Not correct

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