If the Current Ratio Is 3

question 160

Multiple Choice

If the current ratio is 3.2, and the current liabilities are $110,000, what is the amount of current assets?

• A) $320,000
• B) $352,000
• C) $176,000
• D) $ 34,375

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Definitions:

Monetary Unit Assumption

An accounting principle stating that transactions and events can be expressed in monetary units for recording and reporting.

Presumption

An assumption made based on the general experience or probability without specific evidence or proof.

Time Period Assumption

The accounting principle that allows the life of a company to be divided into time periods, such as months or years, for reporting purposes.

Company Life

A conceptual term generally referring to the length of time a company has been in business or is expected to operate.