Accounting Multiple Choice Question – 10 March 2023

A company has the following information in £00ks from its balance sheet:

• taxation due – 40
• accounts receivable – 150
• bank overdraft – 90
• Inventory – 110
• proposed dividend – 70
• accounts payable – 80

What is the liquidity (acid test or quick) or Liquid Capital ratio?

Select ONE answer:

1. 0.54:1
2. 0.88:1
3. 0.93:1
4. 1.85:1

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 1

1. Correct – 150 / (40 + 90 + 70 + 80)
2. Not correct
3. Not correct
4. Not correct

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