Based on the following information, determine the current ratio, assuming all accounts have a normal balance?
A) 1.23
B) 3.58
C) 11.57
D) 12.3
E) 1.57

Question

Based on the following information, determine the current ratio, assuming all accounts have a normal balance? 
A) 1.23 
B) 3.58 
C) 11.57 
D) 12.3 
E) 1.57

Quizplus · Accepted Answer

Current ratio is calculated by dividing current assets by current liabilities.

Current assets:
Cash and cash equivalents: $34,000
Accounts receivable: $57,000
Inventory: $96,000
Prepaid expenses: $3,000
Total current assets: $190,000

Current liabilities:
Accounts payable: $16,000
Notes payable (due within 12 months): $12,000
Accrued expenses: $30,000
Total current liabilities: $58,000

Current ratio = current assets / current liabilities
Current ratio = $190,000 / $58,000
Current ratio = 3.28

The closest option to this is B (3.58).

Based on the Following Information, Determine the Current Ratio, Assuming