Day: December 8, 2021

A company has a high liquidity ratio.

Which of the following will reduce liquidity?

Select ONE answer:

1. doubling the annual rates of depreciation
2. making a bonus issue to existing shareholders
3. converting loan stock into shares
4. replacing machinery earlier than planned

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

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

This work is licensed under a Creative Commons Attribution 4.0 International License.