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O-LevelAccountingAnalysis and interpretation7707/11 · May/June 2020 · Q311 Mark

A company provided the following information about its liquid (acid test) ratio. Year 1 1.2:1 Year 2 1.4:1 Year 3 1.6:1 Which would explain the changes in the ratio?

AInventory is increasing.
BOther payables are decreasing.
CTrade payables are increasing.
DTrade receivables are decreasing.

✓ Correct answer

B: Other payables are decreasing.

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About this question

Topic
Analysis and interpretation, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source
O-Level Accounting, May/June 2020 Paper 1 Variant 1, question 31.

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