Data from Fontecchio Corporation's Most Recent Balance Sheet Appear Below

question 150

Multiple Choice

Data from Fontecchio Corporation's most recent balance sheet appear below: $\begin{array}{lr}\text {Cash. }&\$18,000\\\text {Marketable securities }&\$24,000\\\text {Accounts receivable. }&\$39,000\\\text {Short-term notes receivable. }&\$0\\\text {Inventory. }&\$60,000\\\text {Prepaid expenses }&\$14,000\\\text {Current liabilities. }&\$120,000\\\end{array}$
The corporation's acid-test ratio is closest to:

• A)0.35
• B)0.15
• C)0.68
• D)0.79

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Definitions:

Giffen Good

A product that experiences an increase in demand as its price rises, contrary to the basic law of demand, often because it lacks close substitutes.

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Goods for which demand increases when consumers' income increases and falls when income decreases, all else being equal.

Consumption Bundle

A combination of various goods and services that an individual consumes.

Cappuccino

A popular coffee drink made with equal parts espresso, steamed milk, and frothed milk.