The following financial information is from Shovels Construction Company:
Accounts Payable $ 15,000
Buildings 80,000
Cash 10,500
Accounts Receivable 9,500
Sales Tax Payable 4,500
Retained Earnings 47,500
Supplies 40,000
Notes Payable (due in 18 months) 35,000
Interest Payable 3,000
Common Stock 35,000
What is the amount of current assets, assuming the accounts above reflect normal activity?
A) $20,000.
B) $60,000.
C) $140,000.
D) $175,000.
Answer: B
With respect to current assets, liquidity refers to:
A) How quickly the asset can be converted to cash.
B) The magnitude of the asset's account balance.
C) Whether cash was paid for the asset at the time of acquisition.
D) The accuracy of the balance being reported.
Answer: A
Current assets include:
A) Assets that must be paid for within 12 months.
B) Assets that will be used up or converted to cash within 12 months.
C) Assets that will be used for many years.
D) Any assets that were purchased for cash.
Answer: B
