Use the Information Given Below to Answer the Following Questions

question 46

Multiple Choice

Use the information given below to answer the following questions:
James has a business mowing lawns. On 31 December 2012, he has a utility truck worth $7000, a mower worth $250 and an edger worth $110. Fuel on hand cost $70. Customers owe him $360 and he owes his fuel supplier $90. He owes his sister $5000, which is a long-term loan, and he has $110 in his business bank account.
-What is James's current ratio?

• A) 6:1
• B) 5:1
• C) 4.2:1
• D) 4.7:1.

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Definitions:

Business Combination

A process where two or more companies merge or one acquires another, resulting in consolidation of assets and liabilities.

Consolidation Worksheet

A tool used in the preparation of consolidated financial statements, helping to combine the financials of a parent company and its subsidiaries and eliminate inter-company transactions.

Acquisition Transaction

The process by which one company purchases most or all of another company's shares or assets, effectively taking control of the target company.

Common Stock

A type of ownership in a corporation, representing a claim on part of the company's assets and earnings.