Calculate the Cash Ratio Given the Following Information: Current Ratio

question 292

Multiple Choice

Calculate the cash ratio given the following information: current ratio = 3; total current assets = $21,000; cash and cash equivalents = $2,380.

• A) 0.30
• B) 0.31
• C) 0.32
• D) 0.33
• E) 0.34

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Definitions:

Allowances for Doubtful Accounts

Allowances for doubtful accounts is a contra asset account used to estimate the portion of a company's receivables that may ultimately not be collectible.

Bad Debt Expense

Bad debt expense represents the loss that a company incurs when it is unable to collect receivables from customers who are unable to pay their debts.

Adjusting Entry

Refers to adjustments made in the books of accounts to record expenses or revenues that have occurred but are not accurately represented in financial statements.

Write Off

The act of removing an asset from the financial statements due to its impairment or irrelevance, recognizing it as a loss.