A-LevelAccountingInterpretation of Financial Statements (Ratios)Oct/Nov 2009Paper 1 Q201 Mark
A bank manager has reviewed the financial statements of a business. He notes that the liquidity ratio has fallen but that the sales for the year have remained constant. What explains this fall in the liquidity ratio?
Adecrease in stocks of finished goods
Bdecrease in the overdraft
Can increase in cash
Dan increase in trade creditors
✓ Correct Answer
The correct answer is D. This question tests the candidate's understanding of interpretation of financial statements (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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