Multiple choice

Directions: Choose the correct option for the given question.Rs. Sundry Debtors 15,000 Bills Receivable (B/R) 12,500 Cash at Bank 17,500 Stock 15,000 Profit 20,000 Creditors 25,000 Bills Payable (B/P) 15,000 Sales 1,00,000 What is the Acid Test Ratio?

  1. 1·5 : 1

  2. 1·125 : 1

  3. 16 2/3%

  4. 50%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Acid Test Ratio (Quick Ratio) = Quick Assets / Current Liabilities. Quick assets = Sundry Debtors + Bills Receivable + Cash at Bank = 15000 + 12500 + 17500 = Rs. 45000. Current liabilities = Creditors + Bills Payable = 25000 + 15000 = Rs. 40000. Ratio = 45000/40000 = 1.125:1. Stock is excluded as it's less liquid.

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