ExpertMedium1 markMultiple Choice
ACCA · Question 63 · Interpretation of financial statements
Scenario: AgriGrow Co trial balance at 30 Sept 20X6: Revenue $2,500,000; Purchases $1,400,000; Opening Inventory $300,000; Trade Receivables $450,000; Trade Payables $200,000; Allowance for receivables (1 Oct 20X5) $20,000; Plant & Machinery Cost $800,000; Acc. Dep (1 Oct 20X5) $320,000. Adjustments: 1. Closing inventory cost $350,000 (includes damaged items cost $50,000, NRV $30,000). 2. P&M depreciation 20% reducing balance. 3. Allowance for receivables adjusted to 5% of receivables. 4. Accrue unpaid electricity $15,000.
What is the Current Ratio for AgriGrow Co? (Round to 2 decimal places)
Scenario: AgriGrow Co trial balance at 30 Sept 20X6: Revenue $2,500,000; Purchases $1,400,000; Opening Inventory $300,000; Trade Receivables $450,000; Trade Payables $200,000; Allowance for receivables (1 Oct 20X5) $20,000; Plant & Machinery Cost $800,000; Acc. Dep (1 Oct 20X5) $320,000. Adjustments: 1. Closing inventory cost $350,000 (includes damaged items cost $50,000, NRV $30,000). 2. P&M depreciation 20% reducing balance. 3. Allowance for receivables adjusted to 5% of receivables. 4. Accrue unpaid electricity $15,000.
What is the Current Ratio for AgriGrow Co? (Round to 2 decimal places)
Answer options:
A.
3.72
B.
3.52
C.
1.99
D.
4.00
How to approach this question
Divide Total Current Assets by Total Current Liabilities.
Full Answer
B.3.52✓ Correct
Current Ratio = Current Assets / Current Liabilities = $757,500 / $215,000 = 3.523... rounded to 3.52.
Common mistakes
Using the Quick Ratio formula.
Practice the full ACCA FA — Financial Accounting Practice Exam 2
65 questions · hints · full answers · grading
More questions from this exam
Q01BioGenix Ltd, a biotech startup, is deciding whether to disclose a highly uncertain contingent li...EasyQ02Which of the following bodies is primarily responsible for issuing International Financial Report...EasyQ03Which of the following are the primary responsibilities of the directors of a limited liability c...MediumQ04Titanium Forge Co, a heavy manufacturing firm, recently incurred the following costs:
1. $50,000 ...MediumQ05A company makes a 1 for 4 bonus issue of shares. The nominal value of the shares is $1. The compa...Medium