I n t e r a c t I v e t e X t foundations in Accountancy/ acca financial accounting (ffa/FA) bpp learning Media is an acca approved Content Provider

Which of the following statements concerning this increase is/are correct? 

1 

The increase in the current ratio could indicate that the company is less likely to be 

able to pay its debts on time.  

2 

The increase in the current ratio could have been caused by an increase in revenue 

generated by increased credit sales prices, while supplier costs remained the same.  

3 

The increase in the current ratio could have been caused by an increase in costs 

charged by suppliers, while the selling price of goods remained the same.  

A 1 

only 

B 2 

only 

C  

2 and 3 only  

D 

1 and 3 only 

(2 marks) 

(d) 

Which of the following factors need to be taken into account when deciding if a parent-