A business has the following assets and liabilities.

[Table showing non current (fixed) assets $420 000, inventory (stocks) $120 000, trade receivables (debtors) $310 000, subtotal $430 000, trade payables (creditors) $(220 000), net current assets $210 000, total assets less current liabilities $630 000, long term loan $(130 000), net assets $500 000]

What is the business's quick (acid test) ratio?

Q: What topic does this question test?

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

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Accounting Oct/Nov 2010 examination, Paper 1 Variant 2 (9706_w10_qp_12.pdf).

Question

A business has the following assets and liabilities.

[Table showing non current (fixed) assets $420 000, inventory (stocks) $120 000, trade receivables (debtors) $310 000, subtotal $430 000, trade payables (creditors) $(220 000), net current assets $210 000, total assets less current liabilities $630 000, long term loan $(130 000), net assets $500 000]

What is the business's quick (acid test) ratio?

Oracle Prep · Accepted Answer

The correct answer is A: 1.41 : 1.

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