WAEC Accounting 2019 Paper

Concept:The quick ratio, also called the acid-test ratio, measures how well a business can meet its short-term debts using its most liquid current assets.It excludes stock or inventory because stock may not be quickly converted into cash.Explanation:The standard formula for the quick ratio is:$$\text{Quick Ratio} = \frac{\text{Current Assets} - \text{Stock}}{\text{Current Liabilities}}$$This is expressed in the form $X - Y : Z$.In the numerator, $X - Y$ represents current assets minus stock.Therefore, $X =$ current assets.And $Y =$ stock.In the denominator, $Z$ represents current liabilities.So, $Z =$ current liabilities.Hence, option C correctly identifies each term.Answer:Option C: $x =$ current assets; $y =$ stock and $z =$ current liabilities.