O-LevelAccountingAnalysis and interpretation7707/11 · May/June 2011 · Q281 Mark

Jake had current liabilities of trade payables and had current assets of inventory, trade receivables and cash at bank. Which measure would improve his current ratio?

Abuying additional inventory and paying in cash

Bdecreasing drawings

Crevaluing non-current assets

Dselling inventory on credit rather than for cash

✓ Correct answer

B: decreasing drawings

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Topic: Analysis and interpretation, O-Level Accounting (syllabus 7707). Multiple choice, 1 mark.
Source: O-Level Accounting, May/June 2011 Paper 1 Variant 1, question 28.

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