Question

Question Completion Status: QUESTION 1 Find the best match A. Acid test ratio or Quick ratio - - Current Assets - current liabilities 7 Current assets divided by current liabilities B. Current Ratio (Current assets-prepaid expenses-merchandise inventory) divided by current liabilities C. Working capital D. Gross Margin Ratio QUESTION 2 James Company's current assets are Cash-$40,000, Accounts Receivable $5000, Inventory $3000, and prepaid expenses $2000. Their current liabilities are $10,000. Their long term liabilities were $20,000. What is the company's working capital? 4.5 to 1 - 7 What is James company's current ratio? - What is the company's quick ratio? B. $40,000 C. $30,000 How much are James Company's total liabilities? D.5 to 1 Click Save and Submit to save and submit Click Sow All Save All An

Answer 1

1	Current Assets - Current Liabilities	Working Capital
	Current Assets / Current Liabilities	Current Ratio
	(Current Assets - prepaid expenses - inventory) / Current Liabilities	Accid Test ratio or Quick ratio
2	Workin Capital($40,000+5,000+3,000+2,000-10,000)	$           40,000
	Curren Ratio($50,000 / $10,000)	5 to 1
	Quick Ratio[($50,000-3,000-2,000)/10,000]	4.5 to 1
	Total Liabilities($10,000+$20,000)	$           30,000
3	Income Statement
	Revenue	$        1,00,000
	Cost of good sold	$          -40,000
	Gross Profit		$           60,000
	Expenses:
	Selling expenses	$           15,000
	Administrative expenses	$           10,000
	Total operating expenses		$           25,000
	Net Profit		$           35,000
	Add:Revenue net of Interest expenses		$            -5,000
	Net Income		$           30,000
	Gross Profit	$           60,000
	Total operating expenses($15,000+$10,000)	$           25,000
	Other Income and expenses($10,000-$15,000)	$            -5,000
	Net Income	$           30,000