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$000 Sales revenue 20,000 Cost...

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Verified Solution

Question

Accounting

$000

Sales revenue

20,000

Cost of sales

(17,000)

Distribution costs

(600)

Administrative expenses

(400)

Net interest

(300)

Taxation

(1,000)

Dividends

(200)

Non-current assets

20,000

Current assets

Inventories

5,000

Prepaid Expenses

1,500

Trade receivables

3,000

Cash and bank

500

Current liabilities

Bank overdraft

1,650

Trade payables

6,000

Taxation

1,000

Dividend (proposed)

200

Non-current liabilities

Loan

1,000

Equity

Ordinary shares

4,000

Share premium account

4,650

Retained earnings

11,500

Required:

Calculate the Acid Test Ratio

Select one:

a.

0.8

b.

0.6

c.

1

d.

0.39

Answer & Explanation Solved by verified expert
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