N N Capital 39 000 Land 20 000 Long Term Loan 1... - JAMB Accounting 2018 Question
| N | N |
| Capital 39,000 | Land 20,000 |
| Long Term Loan 15, 000 | Building 30,000 |
| Creditors 9,000 | Stock 40,000 |
| Debtors 6,000 | |
| Accrued wages 5,000 | Cash 8, 000 |
| 68,000 | 68,000 |
Use the information above to answer the question
What is the acid test ratio in the company?
A
1:1
B
2:3
C
1:2
D
3:2
correct option: a
Acid test ratio: This is a measure of the liquidity position of a company after deduction stock from current assets
Here is the formula: current assets less inventory/current liabilities.
Hence, 18000 - 4000/14000 = 1 : 1
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