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WAEC Financial Accounting 2019 Question 16

Question 16

Interpretation of Accounts

Quick ratio is calculated as y - y : z, where

  1. A.x = stock; y = current assets and z = long-term liabilities.
  2. B.x = current assets; y = debtors and z = current liabilities.
  3. C.x = current assets; y = stock and z = current liabilities.
  4. D.x = debtors; y = stock and z = current assets.
Show the answer and explanation

Answer: C (x = current assets; y = stock and z = current liabilities.)

Explanation

Quick ratio = (current assets − stock) : current liabilities.