If the Current Ratio Is 3

question 188

Multiple Choice

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

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

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Definitions:

Agency Relationship

A situation where one party, known as the agent, is authorized to act on behalf of another, called the principal, in dealing with third parties.

Normative Theories

Theoretical frameworks that prescribe how accounting processes should be conducted based on values, ethics, and ideal practices.

Deductive Reasoning

An approach to theory development that begins with a description of desired outcomes and leads to principles and, in turn, specific actions that should result in those desired outcomes.

Conceptual Framework

A system of interrelated objectives and fundamentals that guides the development of accounting standards.