Please refer to the following information and compute the current ratio: $$\begin{array} { | l | r | r | }
\hline & { \text { Debit } } &{ \text { Credit } } \
\hline \text { Cash } & \$ 4,500 & \
\hline \text { Accounts receivable } & 1,200 & \
\hline \text { Prepaid rent } & 700 & \
\hline \text { Land } & 20,000 & \
\hline \text { Equipment } & 4,000 & \
\hline \text { Accumulated depreciation } & & \$ 800 \
\hline \text { Accounts payable } & & 2,900 \
\hline \text { Salary payable } & & 600 \
\hline \text { Notes payable-long term } & & 9,000 \
\hline
\end{array}$$
A) 1.83
B) 0.55
C) 0.51
D) 0.42

Question

Please refer to the following information and compute the current ratio: $$\begin{array} { | l | r | r | } 
\hline &  { \text { Debit } } &{ \text { Credit } } \
\hline \text { Cash } & \$ 4,500 & \
\hline \text { Accounts receivable } & 1,200 & \
\hline \text { Prepaid rent } & 700 & \
\hline \text { Land } & 20,000 & \
\hline \text { Equipment } & 4,000 & \
\hline \text { Accumulated depreciation } & & \$ 800 \
\hline \text { Accounts payable } & & 2,900 \
\hline \text { Salary payable } & & 600 \
\hline \text { Notes payable-long term } & & 9,000 \
\hline
\end{array}$$
A) 1.83
B) 0.55
C) 0.51
D) 0.42

Quizplus · Accepted Answer

The current ratio is calculated as current assets divided by current liabilities. Current assets include cash ($4,500), accounts receivable ($1,200), and prepaid rent ($700), totaling $6,400. Current liabilities include accounts payable ($2,900) and salary payable ($600), totaling $3,500. The current ratio is $6,400 / $3,500 = 1.83.

Please Refer to the Following Information and Compute the Current