Day: October 8, 2025

Accounting Multiple Choice Question – 8 October 2025

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

Alex plc’s current ratio this year is 1.5:1 compared to 1.25:1 last year.

Which ONE of the following might help to explain this increase in the ratio?

Select ONE answer:

  1. Alex plc paid its payables earlier than usual out of a bank overdraft
  2. Alex plc made an unusually large sale immediately before the year-end
  3. Alex plc made an unusually large purchase of goods for cash immediately before the year-end, and these goods remain in inventory
  4. Alex plc paid its payables later than usual, out of a negative cash balance

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 => An unusually large sale would increase receivables and the current ratio.
  3. Not correct
  4. Not correct

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