A company has current assets of $105,000 and current liabilities of $35,000.It made a $5,000 sale on account.After this transaction,its current ratio will be:

Question

Quizplus · Accepted Answer

Current ratio = Current assets / Current liabilities

Before the transaction:

Current ratio = $105,000 / $35,000 = 3.00

After the $5,000 sale:

Current assets = $105,000 + $5,000 = $110,000

Current ratio = $110,000 / $35,000 = 3.14

Therefore, the current ratio after the transaction will be 3.14, and the best choice is D.

A Company Has Current Assets of $105,000 and Current Liabilities