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Pinecrest Company
Use the Selected Data from Pinecrest Company's Financial

Question 80

Multiple Choice

Pinecrest Company
Use the selected data from Pinecrest Company's financial statements to answer the following question.

20182017 Cash $22,000$14,000 Accounts receivable 42,00016,000 Merchandise inventory 22,00083,000 Prepaid expenses 23,00018,000 Total current assets $109,000$131,000 Total current liabilities $65,000$72,000 Net credit sales 221,000326,000 Cost of goods sold 168,000299,000 Net cash flow from operating activities 16,00029,000\begin{array}{lrr}&2018&2017\\\text { Cash } & \$ 22,000 & \$ 14,000 \\\text { Accounts receivable } & 42,000 & 16,000 \\\text { Merchandise inventory } & 22,000 & 83,000 \\\text { Prepaid expenses } & 23,000 & 18,000 \\\text { Total current assets } & \$ 109,000 & \$ 131,000\\\\\text { Total current liabilities } & \$ 65,000 & \$ 72,000 \\\text { Net credit sales } & 221,000 & 326,000 \\\text { Cost of goods sold } & 168,000 & 299,000 \\\text { Net cash flow from operating activities } & 16,000 & 29,000\end{array}
-Refer to the data for Pinecrest Company.
Which of the following statements is true?


A) The current ratio increased from 2017 to 2018.
B) The acid-test ratio decreased from 2017 to 2018.
C) The amount of working capital decreased from 2017 to 2018.
D) Assuming extreme conditions do not exist,the company appears to be in a worse position to pay its current debts at the end of 2018 compared to 2017.

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