Accounting Multiple Choice Question – 28 December 2020

A business sells stock to a credit customer at a selling price greater than cost.

What effect will this transaction have on the current and quick (acid test) ratios?

Select ONE answer:

1. Both ratios will be unchanged.
2. Both ratios will increase.
3. The current ratio will increase while the quick ratio will not change.
4. The current ratio will not change while the quick ratio will increase.

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 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

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