Alpha Company Provided the Following Balance Sheet for Year 2

question 91

Multiple Choice

Alpha Company provided the following balance sheet for Year 2:
$\begin{array}{lr}\text { Assets }\\\text { Cash }&\$5,400\\\text { Accounts receivable }&15,500\\\text { Inventory }&18,000\\\text { Prepaid expenses }&1,600\\\text { Plant and equipment, net of depreciation }&25,000\\\text { Land }&19,950\\\text { Total assets }&\$85,450\\\text { Liabilities and Stockholders' Equity }\\\text { Accounts payable } & 4,500 \\\text { Salaries payable } & 11,500 \\\text { Bonds payable (due in ten years) } & 10,000 \\\text { Common stock, no par } & 30,000 \\\text { Retained earnings } & 29,450\\\text { Total liabilities and stockholders' equity }&\$85,450\end{array}$

What is the company's plant assets to long-term liabilities ratio?

• A) 2.5
• B) 4.5
• C) 1.7
• D) None of these answers is correct.

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Definitions:

System 2

System 2 is a concept from cognitive psychology that describes the deliberative, analytical, and conscious way of thinking, as opposed to the fast, automatic, intuitive thinking of System 1.

Package Sizes

The dimensions or volume of the container or packaging material used to encase products for distribution, sale, or storage.

Positive Outcomes

Favorable results or benefits achieved from particular actions or activities, especially in the context of decisions or policies.

Anchoring

A cognitive bias that describes the human tendency to rely too heavily on the first piece of information offered when making decisions.