The Following Balance Sheet Information Is Provided for Greene Company

question 28

Multiple Choice

The following balance sheet information is provided for Greene Company for Year 2: What is the company's quick (acid-test) ratio (rounded to one decimal point) ?
$\begin{array}{|l|r|}\hline \text { Assets } \\\hline \text { Cash } & \$5,400 \\\hline \text { Accounts receivable } & 15,500 \\\hline \text { Inventory } & 18,000 \\\hline \text { Prepaid expenses } & 1,600 \\\hline \text { Phant and equipment, net of depreciation } &20,200 \\\hline \text { Land } & 19,950 \\\hline \text { Total assets }&\$80,650\\\hline \text { Liabilities and Stockholders' Equity }\\\hline \text { Accounts payable } & \$ 4,500 \\\hline \text { Salaries payable } & 11,500 \\\hline \text { Bonds payable (Due in 2020) } & 19,000 \\\hline \text { Common stock, no par } & 30,000 \\\hline \text { Retained earnings } & 15,650 \\\hline \text { Total liabilities and stockholder' equity }&\$80,650\\\hline\end{array}$

• A)0.7
• B)1.4
• C)1.3
• D)3.8

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Definitions:

Sales Tax

A tax imposed by a government on the sale of goods and services.

List Price

The manufacturer's suggested retail price of a product before any discounts or allowances.

Purchases Discount

A reduction in the amount payable by a buyer to a seller, if the payment on the purchase is made within a specified period.

Chart Of Accounts

A list of the accounts in the ledger.