Question

All Wet Water Softener Systems has Cash of $400?, Accounts Receivable of $1,000?, and Office Supplies of $600. All Wet owes $300 on Accounts Payable and has Salaries Payable of $100. All Wet?'s current ratio is
A. 2.00

B. 0.20

C. 0.71

D. 5.00

Answer 1

Answer:

D. 5.00

Explanation:

The calculation of current ratio is given below :-

Current Ratio = Current Assets ÷ Current Liabilities

where,

Current Asset = cash + account receivable + office supply

= $400 + $1000 + $600

= $2,000

and the Current Liabilities is

= Account payable + salary payable

= $300 + $100

= $400

So, the current ratio is

= $2,000 ÷ $400

= 5 times