Use the Selected Data from Pinecrest Company's Financial Statements to Answer

question 147

Multiple Choice

Use the selected data from Pinecrest Company's financial statements to answer the following question. $$\begin{array} { l r r } & \underline { 2017 } & \underline { 2016 } \\\text { Cash } & \$ 22,000 & \$ 14,000 \\\text { Accounts receivable } & 42,000 & 16,000 \\\text { Merchandise inventory } & 22,000 & 83,000 \\\text { Prepaid expenses }& \underline { 23,000 } & \underline { 18,000 } \\\text { Total current assets } & \underline { \mathbf { \$ 1 0 9 , 0 0 0 } } & \underline { \mathbf { \$ 1 3 1 , 0 0 0 } } \\\\\text { Total current liabilities } & \$ 65,000 & \$ 72,000 \\\text { Net credit sales } & 221,000 & 326,000 \\\text { Cost of goods sold } & 168,000 & 299,000 \\\text { Net cash flow from operating activities } & 16,000 & 29,000\end{array}$$ ​
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-Refer to the data for Pinecrest Company. ?
Which of the following statements is true?

• A) The current ratio increased from 2016 to 2017.
• B) The acid-test ratio decreased from 2016 to 2017.
• C) The amount of working capital decreased from 2016 to 2017.
• D) Assuming extreme conditions do not exist, the company appears to be in a worse position to pay its current debts at the end of 2017 compared to 2016.

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Definitions:

Primacy Effect

The tendency to evaluate others in terms of first impressions.

Actor-Observer Effect

A psychological bias where people tend to attribute their own actions to situational factors while attributing others' actions to their personalities or character.

Fundamental Attribution Error

The tendency to overemphasize personality-based explanations for behaviors observed in others while underestimating the influence of external factors.

Social-Cognitive Perspective

A view in psychology that focuses on how people learn through observing others, and how they control their behavior through self-regulation and social interaction.