Answered: Below is an extract from Aluki Ltd.'s…

Below is an extract from Aluki Ltd.'s statement of financial position: Total current assets £40,000 Total current liabilities £20,000

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

22nd Edition

ISBN:9781305666160

Author:James A. Heintz, Robert W. Parry

Publisher:James A. Heintz, Robert W. Parry

Chapter15: Financial Statements And Year-end Accounting For A Merchandising Business

Section: Chapter Questions

Problem 4CE

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Question

Below is an extract from Aluki Ltd.'s statement of financial position:

Total current assets £40,000
Total current liabilities £20,000

If the company’s current ratio is 2:1 and its quick test (or acid ratio) is 1:1, what must the value of inventory be?

a) £20,000

b) £40,000

c) £60,000

d) £30,000

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