Ima Knerd is happy with the progress of her computer repair business. She has made a profit in each of the past six months. However, her accountant is worried because the current ratio for the business is 0.80. Explain to Ima why this is a concern.
What will be an ideal response?
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Q. 2) The account that should be credited for the total income tax withheld from employee's earnings is
a. FICA Tax Payable.
b. FICA Tax Expense.
c. Employee Income Tax Payable.
d. Employee Income Tax Expense.
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Q. 3) Estimated liabilities are ________.
A) obligations of an exact amount
B) obligations of an uncertain amount
C) always current liabilities
D) always long-term liabilities
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Q. 4) On November 1, 2011, Frigate Shipping Company bought equipment that cost 400,000, with an estimated useful life of 8 years and an estimated salvage value of 28,000.
The company uses the straight-line method of depreciation and has a fiscal year ending on October 31. For the year ended October 31, 2012, Frigate Company will report depreciation expense of ________.
A) 50,000
B) 33,333
C) 46,500
D) 31,000
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Q. 5) Cost flow is in the reverse order in which costs were incurred when using
a. weighted average
b. last-in, first-out
c. first-in, first-out
d. average cost
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Q. 6) XYZ Company's accounting records on January 1 showed:
Accounts receivable 50,000
Allowance for uncollectible accounts (4,000)
On January 2, XYZ wrote off an account receivable of 1,000 from Bounder, Inc As a result of this write-off,
the net realizable value of XYZ's accounts receivable will ________.
A) increase
B) decrease
C) remain the same
D) The answer cannot be determined from the information given.
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