Please Refer to the Following Data Using the "Rule of Thumb" Guidelines,what Conclusion Could You Draw

question 3

Multiple Choice

Please refer to the following data: $$\begin{array} { | l | r | r | } \hline & { \text { Debit } } & { \text { Credit } } \\\hline \text { Cash } & \$ 16,000 & \\\hline \text { Accounts receivable } & 2,800 & \\\hline \text { Prepaid insurance } & 800 & \\\hline \text { Land } & 40,000 & \\\hline \text { Building } & 50,000 & \\\hline \text { Accumulated depreciation } & & \$ 32,000 \\\hline \text { Accounts payable } & & 2,200 \\\hline \text { Wages payable } & & 4,000 \\\hline \text { Notes payable-short term } & & 2,300 \\\hline\end{array}$$ Using the "rule of thumb" guidelines,what conclusion could you draw?

• A) This business faces a liquidity problem, and may have trouble paying off its current liabilities with its current assets.
• B) This business has does not have enough total assets to meet its total obligations.
• C) This business has a very good current ratio, but the debt ratio indicates long-term liquidity problems.
• D) This business should have no difficulties paying off its liabilities.

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Definitions:

Stereoscopic Vision

The ability to perceive depth and three-dimensional structure obtained on the basis of visual information deriving from two eyes by individuals with normally developed binocular vision.

Convergence

The process of coming together or the degree to which two or more things converge, often used in the context of eyesight or technologies.

Motion Parallax

A depth cue that involves objects at varying distances moving across the observer's field of vision at different speeds.

Autokinetic Effect

A visual phenomenon where a stationary small point of light in a dark room appears to move because of involuntary eye movements.