Which of the Following Situations Describes a Person Who Could

question 53

Multiple Choice

Which of the following situations describes a person who could be insolvent?

• A) Assets $56,000; annual expenses $60,000
• B) Assets $78,000; net worth $22,000
• C) Liabilities $45,000; net worth $6,000
• D) Assets $40,000; liabilities $55,000
• E) Annual cash inflows $45,000; liabilities $50,000

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Definitions:

Average Cost Retail Inventory Method

A method used in retail to estimate ending inventory value by combining the cost-to-retail price ratio with the retail price of goods available for sale.

Ending Inventory

The cumulative worth of products ready for purchase at the close of a financial cycle.

Employee Discounts

Reductions in price offered to employees of a company as a part of their employment benefits, encouraging them to purchase products or services from the employer.