A Company Has $200 in Cash, $500 in Accounts Receivable

question 24

Multiple Choice

A company has $200 in cash, $500 in accounts receivable, and $700 in inventory. If current liabilities are $400, then the quick ratio would be

• A) 2.25 to 1
• B) 1.75 to 1
• C) 3.50 to 1
• D) 3.00 to 1

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Definitions:

Interest Collected

The amount of money received by an entity as interest from loans, investments, or savings accounts.

Journalize

The process of recording business transactions in the journal of an accounting system.

Petty Cash Fund

A modest sum of money maintained for covering small or unforeseen costs.

Journal Entries

Recorded transactions in the accounting records of a business that demonstrate the financial activities and their impacts.