Question

Use the following information on current assets and current liabilities to compute and interpret the acidtest
ratio. Explain what the acid-test ratio of a company measures. Cash . $1,490 Prepaid expenses . $ 700
Accounts receivable . 2,800 Accounts payable . 5,750
Inventory . 6,000 Other current liabilities . 850

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Sales are $2.6 million in 2020, $2.7 million in 2021, and $2.5 million in 2022. What is the percenta...

A: Given information is: Sales in 2020 = $2.6 million Sales in 2021 = $2.7 million Sales in 2022 = $2.5...

Q: Identify which of the following accounts would be included in a post-closing trial balance. Land

A: Post closing trial balance is the summary of ledger accounts balances after all the adjustments. It ...

Q: Although Sahra now pays Stone & Co Accounting Specialists Pty Ltd to manage the accounting funct...

A: Financial Accounting  It is that branch of accounting which is associated with recording, identifyi...

Q: On January 1, 2017, Corgan Company acquired 70 percent of the outstanding voting stock of Smashing, ...

A: The following calculations are done to show the adjustments after the acquisition of Smashing Co. by...

Q: Jackson Moving & Storage Co. paid $120,000 for 25% of the common stock ofMcDonough Co. at the be...

A: Given information is: Jackson Moving & Storage Co. paid $120,000 for 25% of the common stock of ...

Q: Harris Company manufactures and sells a single product. A partially completed schedule of the compan...

A: The variable cost is the cost which changes with the change in the output level. For example, sales ...

Q: Kignana Corporation manufactures and sells hand-painted clay figurines of popular sports heroes. Sho...

A: Direct cost refers to the expenses of doing business that can be straightforwardly applied to creati...

Q: An audit committee isa. Composed of internal auditors.b. Composed of members of the audit team.c. Co...

A: An audit committee also refers as review council and it is one of the major working panels of an org...

Q: during the fiscal year ended december 31, duckworth corporation engaged in the following transaction...

A: Notes payable is a written document issued by borrower of money to the lender promising to pay money...

Q: Tao Co. receives $10,000 cash in advance for four months of evenly planned legal services beginning ...

A: Given information is: Tao Co. receives $10,000 cash in advance for four months of evenly planned leg...

Q: On January 1, 2019, when its $30 par value common stock was selling for $80 per share, Ivanhoe Corp....

A: Convertible Debentures: A debenture holder is a creditor of the company.Any debenture is a long term...

Q: Duringthe most recent year, Smither Travelers Co. bought 3,400 shares of German Corporation common s...

A: Stock: It refers to a security issued in a form of certificate. It implies the right of ownership of...

Q: The fraud triangle asserts that the following three factors must exist for a person to commit fraud....

A: Fraud triangle: It is the model which is created to explain about those three factors because of  wh...

Q: Other Responsibilities and Practices Cases. Read the following cases. For each, statewhether the act...

A: a) In this case, R has completed the reviewing the Financial Statements of W. According to Rule 501,...

Q: In your answers to the following set of questions,assume that Ross Corporation has $200 millionof as...

A: Bankruptcy is a process, legal process, by which people or entities who cannot repay debts to credit...

Q: Hepner Corporation has the following stockholders’ equity accounts:         Preferred stock (8%...

A: Goodwill: It is the intangible asset that adds value to the organisation fame.

Q: BSO, Inc. has current assets of $1,000,000 and current liabilities of $500,000, resulting in a curre...

A: b.  

Q: According to auditing standards, financial statements presented on a special-purpose framework shoul...

A: According to auditing standards, financial statements presented on a special-purpose framework shoul...

Q: Trey Monson starts a merchandising business on December 1 and enters into the following three invent...

A: In FIFO method, goods received first are dispatched first.In perpetual inventory system, the invento...

Q: Rosalind Company reported revenues of $111,500, expenses of $92,545, and net income of $18,955 for t...

A: Return on assets = Net income / Average Total assets where, Average Total assets = (Beginning Total ...

Q: Pedregon Corporation has provided the following information: Cost per Unit Cost per PeriodDirect mat...

A: Cost is the amount incurred for producing a product. Cost includes variable cost and fixed cost. Var...

Q: Explain why the income statement, statement of retainedearnings, and statement of cash flows would b...

A:  

Q: Sports Emporium has two operating segments: sporting goods and sports apparel. The income statement ...

A: Vertical analysis percentage = ( Individual line item / Base amount ) x 100.

Q: Sylvestor Systems borrows $110,000 cash on May 15 by signing a 60-day, 12%, $110,000 note. 1. On wha...

A: Interest on Notes = Face value of Notes x rate of interest x time = $110,000 x 12% x 60/360 = $2,200

Q: what is the journal entries and ledgers for this sources ?

A: The journal entries are the financial records of the business transactions.

Q: How do the professional audit standards differ for (a) errors, (b) frauds, (c) direct-effect noncomp...

A: Errors:   Error refers to omission of amounts or misstatement or disclosure in financial statement....

Q: Performance Principle: Evidence. Generally accepted auditing standards (the performance principle) r...

A: Click to see the answer

Q: Greg’s Bicycle Shop has the following transactions related to its top-selling Mongoose mountain bike...

A: Special identification method: The specific identification inventory valuation method is a system fo...

Q: Income statement and balance sheet data for The Athletic Attic are provided below.Required: 1. Calcu...

A: Hey, since there are multiple questions posted, we will answer first question. If you want any speci...

Q: Lastly the journal entry worksheet is needed Req 2c

A: Journal entries are recording of the transaction in the accounting journal in a chronological order....

Q: Q.2 Alexander Company purchased a piece of equipment for $12,000 and depreciated it for three years ...

A: Depreciation is reduction in the value of assets over the time due to normal wear and tear. There ar...

Q: Maines and Wahlen94 state in their research paper on the reliability of accounting information: “Acc...

A: Given: The reliability of the accounting information is explained in the research paper by Maine’s a...

Q: Identify investments as an investment in either debt (D) securities or equity (E) securities. Apple ...

A: Investment in equity securities means investment for the ownership rights of the company and these s...

Q: Learning Objective 1, 2, 3, 4: Record liability-related transactions) The followingtransactions of S...

A: Journal entries: Date Account journal Amount $ Amount $ Mar 3 Inventory 65,000     8% Note pa...

Q: Define fraud examination and describevarious engagements performed by fraudexaminers

A: Although the investigation of fraud shares some attributes with forensic, it is not the same discipl...

Q: Required Answer each of the following questions by providing supporting computations. 1. Assume that...

A: hey there since you have posted multiple questions, we can answer only first question, please re-sub...

Q: Why do companies offer a cash discount?

A: Click to see the answer

Q: Shankar Company uses a perpetual system to record inventory transactions. The company purchases 1,50...

A: Given information is: Shankar Company uses a perpetual system to record inventory transactions. The ...

Q: Prepare journal entries to record the following merchandising transactions of Lowe’s, which uses the...

A: Click to see the answer

Q: Sweet Catering completed the following selected transactions during May 2016: May 1: Prepaid r...

A: The journals are: In the books of Sweet Catering Journals Date Particulars LF Amt(Dr.)($) Amt...

Q: Consider the following independent situations:1. John Smith is the petty-cash custodian. John approv...

A: Weaknesses and suggest alternative procedures to eliminate the weakness: 1) A weakness is created by...

Q: On January 1, 2021, Twister Enterprises, a manufacturer of a variety of transportable spin rides, is...

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from ...

Q: An assurance service is defined as a service thata. Provides auditing services to nonfinancial infor...

A: Assurance service: It is aimed at improving the quality of information for the individual making dec...

Q: What are the three primary cost flow assumptions? How does the specific identification method differ...

A: Inventory: Inventory refers to the stock of goods purchased, utilized and maintained by the company ...

Q: What accounts are affected by closing entries? What accounts are not affected?

A: Closing entries are done at the end of accounting period to close all the temporary accounts and tra...