Your firm has the following balance sheet statement items: total current liabilities of $805,000; total assets of $2,655,000; fixed and other assets of $1,770,000; and long-term debt of $200,000. What is the amount of the firm's total current assets?
A) $885,000
B) $1,550,000
C) $600,000
D) $325,000

Question

Quizplus · Accepted Answer

Total assets = Fixed and other assets + Current assets
Therefore, current assets = Total assets – Fixed and other assets

Current liabilities = Total current assets + Long-term debt
Therefore, Total current assets = Current liabilities – Long-term debt

Total current assets = $805,000 – $200,000 = $605,000
Adding this to the fixed and other assets of $1,770,000, we get the total assets of $2,375,000.

However, the question provides the total assets as $2,655,000. This must mean that the balance sheet has included some other form of assets that do not belong to either current assets or fixed and other assets. Therefore, we cannot calculate the current assets directly but can only find the difference between total assets and fixed and other assets.

Total current assets = Total assets - Fixed and other assets 
Total current assets = $2,655,000 - $1,770,000 = $885,000

Therefore, the best choice is A, $885,000.

Your Firm Has the Following Balance Sheet Statement Items: Total