The Following Information Concerning the Current Assets and Current Liabilities

question 69

Multiple Choice

The following information concerning the current assets and current liabilities of
Mason Company at December 31, 2017, is presented below.
$\begin{array}{lrr}\text { Current Assets }\\\text { Cash } & & \$ 6,700 \\\text { Accounts Receivable } & \$ 7,900 & \\\text { Less Allowance } & \underline{ (70) }& 7,830 \\\text { Inventory } & & 2,270 \\\text { Prepaid expenses } & & \underline{500} \\\text { Total }& & \underline{\$17,300}\\\\\text { Current Liabilities }\\\text { Accounts payable } && \$ 9,000 \\\text { Wages payable } && 500 \\\text { Taxes payable } & &200 \\\text { Rent payable } & &1,600 \\\text { Notes payable } &&\underline{ 2,000} \\\text { Total } &&\underline{ \$ 13,300}\end{array}$
Based on this information, how would the quick ratio be affected if Mason purchased $1,300 of inventory on account?

• A)The quick ratio would decrease from 1.30 to 1.21.
• B)The quick ratio would not change.
• C)The quick ratio would decrease from 1.09 to 1.00.
• D)The quick ratio would decrease from 1.09 to 1.21.

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Definitions:

Master Production Schedule

A detailed plan that dictates when and how much of each product will be produced over a specific period.

Net Requirements Document

A document that outlines the specific needs and requirements of a project, including materials, resources, and timelines, to ensure its successful completion.

Bills Of Material

Detailed lists of raw materials, components, and instructions required to construct, manufacture, or repair a product or service.