Questions on Current Assets

Let’s look at some multiple choice questions which are based on the concept of current assets –

Q 1 Among the following which one is not a current asset

A) Cash

B) Debtors

C) Machinery

D) Prepaid Expense

Correct answer is Option C

Q 2 Calculate current asset from the flowing data

Cash = $3000, Debtors = $2000, Land = $10000, Building = $5000, Raw material = $1000, Short term investments = $500 and Machinery = $2000

A) $9500

B) $6500

C) $ 5500

D) $7500

Correct answer is Option B (It can be found out by adding cash, debtors, raw material and short term investments)

Q 3 If current assets of the company are high then which of the following is true

A) Company will have shortage of liquidity in short run.

B) Company will have excess of liquidity in short run

C) There is neither shortage nor excess of liquidity

D) Both A and B

Correct answer is Option B

Q 4 Buying raw material for cash would

A) Increase current assets

B) Decrease current assets

C) No effect

D) Cannot be determined

Correct answer is Option C

Q 5 Current assets is required for calculation for all of the following except

A) Current ratio

B) Working capital

C) Quick ratio

D) Operating Ratio

Correct answer is Option D

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