Table 4-3
Selected accounting data for the Mariot Services follows:
Current assets$59,000
Current liabilities20,000
Long-term assets70,000
Long-term liabilities37,000
Total revenues25,000
Total expenses22,000
11) Referring to Table 4-3, the current ratio is:
A) 1.13
B) 2.95
C) 2.26
D) 0.34
12) Referring to Table 4-3, the debt ratio is:
A) 0.44
B) 2.26
C) 0.53
D) 0.29
Table 4-4
Selected accounting data as at December 31, 2014 for Huma Delivery follows:
Cash$11,000
Accounts payable8,000
Accounts receivable5,500
Salary payable6,300
Supplies1,200
Unearned revenue2,200
Prepaid rent4,600
Mortgage payable (due 2018)5,500
Equipment22,000
J. Huma, Capital19,900
Accum. amort.-equipment6,100
Service revenue29,000
Salary expense8,000
Furniture12,000
Accum. amort.-furniture4,000
Amortization expense6,800
Utilities expense4,300
Rent expense5,600
13) Referring to Table 4-4, the current ratio is:
A) 1.01
B) 0.84
C) 0.74
D) 1.35
14) Referring to Table 4-4, the debt ratio is:
A) 0.48
B) 0.99
C) 0.36
D) 1.11
Table 4-5
Selected accounting data for Dustman Consulting follows:
Current assets $74,000
Current liabilities44,000
Property, plant and equipment95,000
Long-term liabilities60,000
Total revenues50,000
Total expenses30,000
15) Referring to Table 4-5, the current ratio is:
A) 0.59
B) 1.68
C) 0.71
D) 1.41
16) Referring to Table 4-5, the debt ratio is:
A) 1.41
B) 1.62
C) 1.09
D) 0.62
Table 4-6
Selected accounting data as at December 31, 2014 for Martineau Delivery follows:
Cash$25,000
Accounts payable33,000
Accounts receivable34,000
Salary payable7,500
Supplies6,600
Unearned revenue16,500
Prepaid rent4,000
Mortgage payable (due 2018)48,000
Equipment52,000
C. Lexus, Capital10,000
Accum. amort.-equipment12,000
Service revenue69,000
Salary expense31,000
Accum. amort.-furniture6,000
Furniture49,400
17) Referring to Table 4-6, the current ratio is:
A) 0.82
B) 1.22
C) 1.46
D) 0.69
18) Referring to Table 4-6, the debt ratio is:
A) 1.46
B) 0.82
C) 1.22
D) 0.69
19) Jonathan Swift Movers had the following current ratios 2.2:1; 2.5:1; 2.8:1 for 2012, 2013, 2014 respectively. Which of the following statements most correctly depicts the change in liquidity?
A) Liquidity is improving from selling office supplies.
B) Liquidity is improving due to accounts receivable being collected more quickly.
C) Liquidity is deteriorating due to purchasing equipment.
D) Liquidity is improving due to cash received in exchange of a long-term note payable.
20) Keep Afloat Tugboats had the following debt ratios 0.60; 0.50; 0.45 for 2012, 2013, 2014 respectively. Which of the following statements most correctly depicts the changing ratios?
A) The proportion of assets represented by equity has increased.
B) The business is more at risk to interest rate changes due to increased borrowing.
C) The business is less at risk due to exchanging accounts payable for notes payable.
D) Business risk has not changed due to leverage remaining constant.
Match the following.
A) current ratio
B) debt ratio
21) Current assets divided by current liabilities
22) Total liabilities divided by total assets
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