WAEC Accounting 2023 Theory — Question 10

Question 10 of 21 from the West African Examinations Council (WAEC) Accounting 2023 Theory paper, with the correct answer and a full explanation.

4(a) Explain accounting ratio, giving one example of liquidity ratio.

Model answer

Accounting ratio is the quantitative relationship between two or more accounting values/figures extracted from the financial statements. Example of a liquidity ratio: the current ratio (working capital ratio), or the quick ratio (acid test ratio).

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