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JAMB Principles of Accounts 2005 Question 47

Question 47

Interpretation of Accounts

Use the information below to answer questions 46 and 47.
Balance Sheet (Extract)
Capital ₦40 000; Net profit ₦12 000 (= ₦52 000); Creditors ₦8 000; Wages owed ₦4 000; Rent owed ₦3 000; Total ₦67 000
Building ₦25 000; Equipment ₦12 000; Stock ₦10 000; Debtors ₦15 000; Cash ₦5 000; Total ₦67 000
The quick ratio is

  1. A.1:2
  2. B.1.3:1
  3. C.1.7:1
  4. D.3:1
Show the answer and explanation

Answer: B (1.3:1)

Explanation

Quick assets exclude stock: 15 000 + 5 000 = ₦20 000. 20 000 ÷ 15 000 ≈ 1.3:1.