Newcomb Company Began Operations on December 1, 2013

question 66

Multiple Choice

Newcomb Company began operations on December 1, 2013. The following transactions were recorded in December: 1) The business received $3,000 cash from the issuance of common stock to its stockholders.
2) Provided services on account for $2,500.
3) Paid $1,500 cash for land.
4) Accrued $1,000 of salaries expenses.
5) Purchased $300 of supplies on account to be used in January.
6) Collected $1,300 from customers.
At December 31, 2011, the total debits in the company's adjusted trial balance would be

• A)$6,800.
• B)$5,300.
• C)$2,700.
• D)None of these.

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Definitions:

Inventory Turnover

A financial metric that measures how many times a company has sold and replaced its inventory over a certain period of time.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets, calculated as current assets divided by current liabilities.

Acid-test Ratio

A strict measure used to assess if a company possesses sufficient current assets to pay off its short-term obligations without the need to liquidate its stock.

Times Interest

A metric that evaluates a firm's capability to handle its debt responsibilities using its present earnings.