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?

Q: What is the correct answer to this A-Level Accounting question?

The correct answer is D: an increase in trade creditors.

Q: What topic does this question test?

This question tests Interpretation of Financial Statements (Ratios) in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

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: an increase in trade creditors

📋 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...

🎯 Mark Scheme Breakdown

Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.

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About This A-Level Accounting Question

Topic

This multiple-choice question tests Interpretation of Financial Statements (Ratios) in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Source

This question appeared in the Cambridge A-Level Accounting Oct/Nov 2009 examination, Paper 1 Variant 2.

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