Chapter 10 – Liabilities: Current, Installment Notes, and Contingencies
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Determine the quick ratio (rounded to one decimal point).
a.
5.3
b.
3.6
c.
3.3
d.
2.3
ANSWER:
b
RATIONALE:
Quick Ratio = Quick Assets / Current Liabilities = (Cash + Accounts receivable) /
(Current portion of long-term debt + Accounts payable) = ($28,000 + $15,000) /
($10,000 + $2,000) = $43,000 / $12,000 = 3.6
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.10-07 – LO: 10–07
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.16 – Current Liabilities Reporting
ACCT.ACBSP.APC.23 – Financial Statement Analysis
ACCT.AICPA.FN.03 – Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:27 PM
DATE MODIFIED:
10/16/2017 5:43 PM
119. Based on the following data, what is the quick ratio, rounded to one decimal point?
Accounts payable
$ 30,000
Accounts receivable
60,000
Accrued liabilities
5,000
Cash
30,000
Intangible assets
50,000
Inventory
69,000
Long-term investments
80,000
Long-term liabilities
100,000
Marketable securities
30,000
Fixed assets
670,000
Prepaid expenses
1,000
a.
3.4
b.
3.0
c.
2.2
d.
1.8
ANSWER:
a
RATIONALE:
Quick Ratio = Quick Assets / Current Liabilities = (Accounts receivable + Cash +
Marketable securities) / (Accounts payable + Accrued liabilities) = ($60,000 + $30,000
+ $30,000) / ($30,000 + $5,000) = $120,000 / $35,000 = 3.4
POINTS:
1
DIFFICULTY:
Bloom’s: Applying
Challenging
QUESTION TYPE:
Multiple Choice
