The Following Contains Information from the Records of the Wellborn

question 18

Multiple Choice

The following contains information from the records of the Wellborn Engineers and Architects. Which of the following statements is an accurate interpretation of the current ratio of Wellborn Engineers and Architects?

• A)The company has $2.32 of current assets for every $1.00 of liabilities.
• B)The company has $1.68 of current assets for every $1.00 of current liabilities.
• C)The company has $1.58 of current assets for every $1.00 of liabilities.
• D)The company has $0.59 of current assets for every $1.00 of current liabilities.

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Definitions:

Cash Payments Journal

A specialized accounting journal used to record all cash outlays of a business, including expenses, asset purchases, and debt payments.

Purchases Journal

A record of all purchase transactions for inventory, usually on credit, maintained by a business.

Credit Balance

A situation in accounting where the total credits in an account exceed the total debits, commonly seen in liability accounts.

Doubtful Accounts

Doubtful accounts are receivables that a company believes might become uncollectible in the future, leading to their designation as a bad debt expense.