Brownstone Company Has a Current Ratio of 4

question 88

Multiple Choice

Brownstone Company has a current ratio of 4.00.This indicates that the company has $4 in ________.

• A) current liabilities for every $1 of current assets
• B) total assets for every $1 of current liabilities
• C) current assets for every $1 of current liabilities
• D) total assets for every $1 of current assets

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Definitions:

Original Investment

The initial amount of money spent to acquire an asset or start a business venture, not including subsequent expenses.

Retail Selling Price

The price at which goods are sold to the public, typically higher than the wholesale price to include profit margin.

Salary Allowances

Amounts allocated in addition to base salary, often to cover expenses such as housing, transportation, or for specific purposes set by the employer.

Capital Balance

The amount of money that a partner in a business has contributed or owns in the capital account.