A Company Has Long-Term Assets of $2,000, Current Liabilities of $1,250

question 3

Multiple Choice

A company has long-term assets of $2,000, current liabilities of $1,250, and long-term liabilities of $1,500. If the current ratio is 2.5, then current assets must be

• A)$5,000.
• B)$3,125.
• C)$1,563.
• D)$500.

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Definitions:

Market Value

The immediate cost set for assets or services to be exchanged in a market setting.

Plant Assets

Long-term tangible assets that are used in the operations of a business and are not intended for sale, such as machinery, buildings, and land.

Tangible Assets

Physical assets that have a form, such as machinery, buildings, and inventory, which can be touched or seen.

Accounting Period

A period of time, such as a month, quarter, or year, over which financial statements are prepared to understand a business's financial position and performance.