A corporation reports the following year-end balance sheet data.The company's acid-test ratio equals: $$\begin{array} { l r l r r }
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 5,000 \
\text { Accourts receivable } & 55,000 & \text { Long-temn liabilities } & 35,000 \
\text { Irventory } & 60,000 & \text { Cormon stock } & 100,000 \
\text { Equiprment } & \underline{145,000} & \text { Retaired earnirgs } & \underline{90,000} \
\text { Total assets } & \underline{\$ 300,000} & \text { Total liabilities ard equity } & \underline{\$ 300,000}
\end{array}$$
A)0.58
B)1.27
C)2.07
D)0.37
E)0.63

Question

A corporation reports the following year-end balance sheet data.The company's acid-test ratio equals: $$\begin{array} { l r l r r } 
\text { Cash } & \$ 40,000 & \text { Current liabilities } & \$ 5,000 \
\text { Accourts receivable } & 55,000 & \text { Long-temn liabilities } & 35,000 \
\text { Irventory } & 60,000 & \text { Cormon stock } & 100,000 \
\text { Equiprment } & \underline{145,000} & \text { Retaired earnirgs } & \underline{90,000} \
\text { Total assets } & \underline{\$ 300,000} & \text { Total liabilities ard equity } & \underline{\$ 300,000}
\end{array}$$
A)0.58
B)1.27
C)2.07
D)0.37
E)0.63

Quizplus · Accepted Answer

The acid-test ratio is calculated as (Cash + Accounts Receivable) / Current Liabilities = ($40,000 + $55,000) / $5,000 = $95,000 / $5,000 = 19. This seems to be a mistake in the provided options as none of them match the correct calculation. However, based on the closest match principle, option B (1.27) would be considered if we were to choose from the given options, but it's important to note the actual calculation does not match any of the provided choices.

A Corporation Reports the Following Year-End Balance Sheet Data A)058 B)1

A Corporation Reports the Following Year-End Balance Sheet Data A)058
B)1