Question on: JAMB Accounting - 2024
The following balances were extracted from the books of Adama Ltd on 31st August 2007
| # | |
| Sales | 200000 |
| Drawings | 10000 |
| Land and building | 70000 |
| Furniture | 10000 |
| Debtors | 50000 |
| Creditors | 35000 |
| Capital | 85000 |
| Bank | 10000 |
| General expenses | 10000 |
| Stock (31-08-2007) | 10000 |
| Purchases | 140000 |
| Stock (1-09-2006) | 20000 |
The current ratio is
A
3:1
B
2:1
C
1:1
D
1.2:1
Ask EduPadi AI for a detailed answer
Correct Option: B
To calculate the current ratio:
Current Assets:
Debtors: 50,000
Bank: 10,000
Stock (31-08-2007): 10,000
Total Current Assets = 70,000
Current Liabilities:
Creditors: 35,000
Current Ratio:
\( \frac{70,000}{35,000} = 2:1 \)
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