Assume the Following Data: Current Assets = 500; Current Liabilities

question 38

Multiple Choice

Assume the following data: Current assets = 500; Current liabilities = 250; Inventory = 200; Account receivables = 200. Calculate the quick ratio.

• A)1.0
• B)2.0
• C)1.2
• D)0.4

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Definitions:

Prepaid Insurance

An asset account on the balance sheet representing insurance payments made in advance, which are expensed out over the period to which the insurance coverage relates.

Insurance Expense

The cost incurred by an entity for obtaining insurance coverage, typically recognized as an expense in the income statement.

Adjusting Entry

An accounting entry made at the end of a period to allocate income and expenditure to the appropriate years.

IFRS

International Financial Reporting Standards are a set of accounting guidelines that govern how companies prepare and present their financial statements internationally.