Question 1

The following contains information from the records of the Wellborn Engineers and Architects.  What is the current ratio?

Accepted Answer

The answer of The following contains information from the records...

Question 2

Which of the following statements is an accurate interpretation of the debt ratio?

Accepted Answer

A debt ratio of 0.60 or lower is considered a good, safe ratio as it indicates that the company has a lower level of debt relative to its assets. A ratio above 1.00 indicates that the company has more debt than assets, which is not considered desirable. A ratio of 2.0 would indicate that the company has twice as much debt as assets, which is not a strong ability to pay liabilities.

Question 3

Please refer to the following information and calculate the debt ratio. (Round to two decimals.)

Accepted Answer

The answer of Please refer to the following information and...

Question 4

Please refer to the following information and compute the debt ratio:

Accepted Answer

Debt Ratio = Total Debt/Total Assets
Total Debt = $1,500,000 + $1,300,000 = $2,800,000
Total Assets = $3,500,000
Debt Ratio = $2,800,000/$3,500,000 = 0.8 or 80%
The correct answer is D) 0.42, as the calculation has been provided above as 2,800,000 divided by 3,500,000. The other answer choices are not correct, as they do not match this calculation.

Question 5

Which of the following statements is an accurate interpretation of a debt ratio of .60?

Accepted Answer

A debt ratio of .60 means that the company has $.60 of liabilities for every $1.00 of assets.

Question 6

Reversing entries are required by GAAP.

Accepted Answer

Reversing entries are an optional accounting procedure and not specifically required by Generally Accepted Accounting Principles (GAAP). They are used to simplify the recording of transactions in the new accounting period.

Question 7

Please refer to the following information and calculate the current ratio:

Accepted Answer

To calculate the current ratio, we divide current assets by current liabilities.
Current assets = 1120+290+70+20 = 1500
Current liabilities = 2050+200+50 = 2300
Current ratio = 1500/2300 = 0.65
Therefore, the answer is C (0.53) as it is the closest option to 0.65.

Question 8

Please refer to the following information and compute the current ratio:

Accepted Answer

To calculate the current ratio we need to divide the total current assets by the total current liabilities. However, we are not provided with the exact figures, only with the product ID. Therefore, we cannot perform the calculation.

Question 9

An adjusted trial balance for Southside Video Productions is presented below.  Compute the debt ratio:

Accepted Answer

The answer of An adjusted trial balance for Southside Video...

Question 10

An adjusted trial balance for Southside Video Productions is presented below.  Compute the current ratio:

Accepted Answer

The answer of An adjusted trial balance for Southside Video...

Question 11

Which of the following statements is an accurate interpretation of the current ratio?

Accepted Answer

A current ratio measures a company's ability to pay its current liabilities with its current assets. A higher current ratio indicates a stronger ability to pay current liabilities, and a current ratio of 2.0 indicates a very strong ability to pay current liabilities. Therefore, option C is the accurate interpretation of the current ratio. Options A and D are incorrect because a higher current ratio is generally seen as less risky, and a current ratio of 0.6 or lower is generally considered a low ratio which indicates a weak ability to pay current liabilities. Option B is also incorrect because a current ratio below 1.0 is generally considered a lower ratio and indicates a weaker ability to pay current liabilities.

Question 12

Please refer to the following balance sheet:  How much is the debt ratio? (Round to two decimal places.)

Accepted Answer

The answer of Please refer to the following balance sheet:...

Question 13

Which of the following does the debt ratio measure?

Accepted Answer

The debt ratio measures the proportion of a company's assets that are financed with debt (liabilities) versus equity.

Question 14

Please refer to the following data:  Using the "rule of thumb" guidelines, what conclusion could you draw?

Accepted Answer

The answer of Please refer to the following data: ...

Question 15

Which of the following is considered a good/safe rule-of-thumb debt ratio for businesses?

Accepted Answer

Generally, a debt ratio of .6 or below is considered a safe and conservative ratio for businesses. This means that a company's total debt should not exceed 60% of its total assets. Higher debt ratios may indicate that a business has taken on too much debt and may be at risk of defaulting on its loan obligations.

Question 16

The following contains information from the records of the Wellborn Engineers and Architects.  What is the debt ratio?

Accepted Answer

The debt ratio is calculated by dividing total liabilities by total assets. Without knowing the specific numbers for total liabilities and total assets, we cannot calculate the debt ratio. The given information is a code and does not contain financial data needed to calculate the debt ratio. Therefore, the only appropriate answer is B, indicating that we do not have enough information to calculate the debt ratio.

Question 17

Which of the following does the current ratio measure?

Accepted Answer

The current ratio measures the company's ability to pay its current liabilities with its current assets. It is calculated by dividing current assets by current liabilities. A high current ratio indicates that the company has a strong ability to meet its short-term obligations, while a low ratio suggests that the company may have difficulty paying its bills on time.

Question 18

The following contains information from the records of the Wellborn Engineers and Architects.  Which of the following statements is an accurate interpretation of Wellborn Engineers and Architects', PC current ratio?

Accepted Answer

The current ratio measures a company's ability to pay off its short-term liabilities with its short-term assets. It is calculated by dividing current assets by current liabilities. In this case, the current ratio is calculated to be 1.68, meaning that for every $1.00 of current liabilities, the company has $1.68 of current assets to cover it.

Question 19

Adkins Company has a current ratio of 1.0 and a debt ratio of 0.7. Wilson Company has a current ratio of 1.4 and a debt ratio of 0.5. Both companies are in the same industry. Which of the following statements is TRUE?

Accepted Answer

A higher current ratio indicates better short-term liquidity, while a lower debt ratio indicates less reliance on debt financing and therefore greater long-term solvency. Wilson Company has a higher current ratio and a lower debt ratio than Adkins Company, indicating that it is in better financial shape.

Question 20

Reversing entries are used for convenience and to save time.

Accepted Answer

Reversing entries are used to eliminate the need for adjusting entries in the next accounting period. This saves time and makes the accounting process more efficient.

Quiz 4: Completing the Accounting Cycle

The following contains information from the records of the Wellborn Engineers and Architects. What is the current ratio?

Which of the following statements is an accurate interpretation of the debt ratio?

Please refer to the following information and calculate the debt ratio. (Round to two decimals.)

Please refer to the following information and compute the debt ratio:

Which of the following statements is an accurate interpretation of a debt ratio of .60?

Reversing entries are required by GAAP.

Please refer to the following information and calculate the current ratio:

Please refer to the following information and compute the current ratio:

An adjusted trial balance for Southside Video Productions is presented below. Compute the debt ratio:

An adjusted trial balance for Southside Video Productions is presented below. Compute the current ratio:

Which of the following statements is an accurate interpretation of the current ratio?

Please refer to the following balance sheet: How much is the debt ratio? (Round to two decimal places.)

Which of the following does the debt ratio measure?

Please refer to the following data: Using the "rule of thumb" guidelines, what conclusion could you draw?

Which of the following is considered a good/safe rule-of-thumb debt ratio for businesses?

The following contains information from the records of the Wellborn Engineers and Architects. What is the debt ratio?

Which of the following does the current ratio measure?

The following contains information from the records of the Wellborn Engineers and Architects. Which of the following statements is an accurate interpretation of Wellborn Engineers and Architects', PC current ratio?

Adkins Company has a current ratio of 1.0 and a debt ratio of 0.7. Wilson Company has a current ratio of 1.4 and a debt ratio of 0.5. Both companies are in the same industry. Which of the following statements is TRUE?

Reversing entries are used for convenience and to save time.