Carrington Company owes you $500 on account due within 15 days. Which of the following amounts on its statement of financial position would help you to determine the likelihood that you will be paid in full and on time?

Question

Quizplus · Accepted Answer

The amount of trade receivables on the statement of financial position would indicate how much money Carrington Company owes in accounts receivable, including your $500. This would give an indication of their ability to pay their outstanding debts, including yours, in full and on time. Cash is also important but may not provide a complete picture of their ability to pay debts since cash balances can fluctuate. Property and equipment, inventory, contributed capital, and retained earnings do not provide any direct information about the company's ability to pay its outstanding debts.

Carrington Company Owes You $500 on Account Due Within 15