As of December 31, 2012, Grove Corporation Had a Current

question 100

Multiple Choice

As of December 31, 2012, Grove Corporation had a current ratio of 1.29, quick ratio of 1.05, and working capital of $18,000. The company uses a perpetual inventory system and sells merchandise for more than it cost. On January 1, 2012, Grove collected $5,200 of accounts receivable. As a result of this transaction, Grove's working capital will:

• A)Increase.
• B)Remain the same.
• C)Decrease.
• D)Cannot be determineD.The transaction will increase one current asset (cash) and decrease another current asset (accounts receivable). Current assets do not change; therefore working capital will not change.

---

Definitions:

Marginal Cost

The cost of producing one additional unit of a product or service.

Average Variable Cost

The total variable expenses divided by the number of units produced, representing the variable cost per unit.

Average Total Cost

The total cost of production divided by the number of goods produced, representing the average cost per unit of output.

Profit-maximizing Firm

A business organization that focuses on making the highest possible profit by adjusting its production and pricing strategies.