A-LevelAccountingFinancial Statements Analysis (Ratios)May/June 2011Paper 1 Q201 Mark
A business has $10 000 in the bank and buys inventory for $6000 paying by cheque. What is the effect of this on its current ratio and quick (acid test) ratio?
Adecreases increases
Bdecreases no effect
Cno effect decreases
Dno effect no effect
✓ Correct Answer
The correct answer is C. This question tests the candidate's understanding of financial statements analysis (ratios) within the Accountingsyllabus. The examiner's mark scheme requires...
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
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