Use the Following Information for Questions:
Blue Sea Corporation's Books

question 5

Multiple Choice

Use the following information for questions:
Blue Sea Corporation's books revealed the following for 2011 and 2010: $$\begin{array} { l c r } & 2011 & 2010 \\\text { Cash } & 27,750 & \$ 21,250 \\\text { Accounts receivable }& 42,000 & 37,500 \\\text { Inventory } & 72,250 & 61,600 \\\text { Other prepaid assets } & 12,500 & 12,500 \\\text { Accounts payable } & 41,250 & 38,000 \\\text { Other current payables } & 13,000 & 15,000 \\\text { Sharehol ders' equity }& 100,250 & 79,850 \\\text { Sales } & 525,000 & 450,750 \\\text { Cost of sales }& 300,000 & 240,750 \\\text { Operating expenses } & 70,000 & 65,000 \\\text { Net income } & 155,000 & 145,000\end{array}$$
-The current ratio for the 2011 year-end is closest to?

• A)2.85
• B)2.62
• C)1.29
• D)1.02

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Definitions:

Cost Of Goods Sold

An accounting term representing the direct costs attributable to the production of goods sold by a company, including materials and labor.

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production, such as rent, depreciation, and salaries.

Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale, or in the form of materials to be consumed in the production process.

Deferred

Refers to expenses or income that has been incurred but not yet recognized in the accounts, to be recognized in a future period.