

1.
Working capital is __________ net working capital.
The Same As

Different From
 2.
The amounts needed to compute a company's working capital come from which of the
following financial statements?
Balance Sheet

Cash Flow Statement

Income Statement

More Than One Will Be Needed

 3.
The operating cycle for most companies will be __________ than one year.
Longer

Shorter
 4.
In what order will a company's current assets appear on a classified balance sheet?
Alphabetical Order

Company's Choice

Descending Order (Largest To Smallest)

Order Of Liquidity
 5.
Is it true or false that current liabilities are listed on a company's balance sheet in the order in
which they need to be paid?
True

False
 6.If a company has current assets of $230,000 and current liabilities of $100,000 the
amount of its working capital is
__________
.
 7.If a company has current assets of $230,000 and current liabilities of $100,000 the
company's current ratio is
__________
: 1.
 8.
How will the total amount of a company's working capital change when a $10,000 account
receivable is collected?
The Total Decreases By $10,000

The Total Increases By $10,000

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 The Total Remains The Same
 9.
How will the total amount of a company's working capital change when the company pays
$8,000 of its accounts payable?
The Total Decreases By $8,000

The Total Increases By $8,000

The Total Remains The Same

 10.
How will a company's liquidity change when some of its products are sold from inventory?
Its Liquidity Decreases

Its Liquidity Increases

Its Liquidity Is Unchanged

 11.
Which of the following amounts will be used in both the calculation of the current ratio and
the quick ratio?
The Total Amount Of Current Assets

The Total Amount Of Current Liabilities

The Total Amount Of Assets

The Total Amount Of Liabilities

 12.
Which of the following is another name for the quick ratio?
Acid Test Ratio

Current Ratio

Working Capital Ratio

 13.A company has current assets of Cash of $40,000; Accounts Receivable of $80,000; and
Inventory of $60,000. The total of its current liabilities is $120,000 and the total amount of its
liabilities is $290,000. Given this information, the company’s quick ratio is
__________
: 1.
 14.During a recent year, a company's accounts receivable had an average balance of
$60,000 and its sales on credit were $540,000. The company’s receivable turnover ratio for
the year was
__________
times.
 15.During a recent year, a company's accounts receivable turnover ratio was 13. The
company's average collection period for the year was
__________
days. (Rounded to the nearest whole day.)

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  16.During a recent year, a company's inventory balance averaged $100,000; its sales were
$500,000; and its cost of goods sold was $400,000. The company’s inventory turnover ratio
for that year was
__________
times.
 17.During a recent year, a company had an average inventory balance of $100,000; its sales
were $500,000; and its cost of goods sold was $400,000. Using a 360-day year, the days’
sales in inventory for the year averaged
__________
days.
 18.
Which is a better indicator of a company's liquidity?
Current Ratio

Quick Ratio
 19.
Which of the following will indicate the specific accounts receivable that have not been
collected?
Aging Of Accounts Receivable

Current Ratio

Sales Journal

Trial Balance
 20.
Which of the following uses amounts from more than one financial statement?
Current Ratio

Inventory Turnover Ratio

Quick Ratio

Working Capital
 21.
A company received a $5,000 invoice for consulting services it had received. The company
chooses to use its business credit card instead of paying cash. Under the accrual method of
accounting, will the use of the credit card result in the company having more working
capital?
Yes

No
 22.
The section of the statement of cash flows that shows the adjustments to most of a company's
working capital accounts is the cash flows from __________ activities.
Financing

Investing

Operating

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  23.
Does an amount in parentheses on the statement of cash flows (SCF) indicate that the amount
described was favorable or unfavorable for the company’s cash balance and/or liquidity?
Favorable

Unfavorable
 24.
If a company's accounts receivable increased by $23,000 during the year, will the $23,000
appear as a positive or negative amount on the statement of cash flows?
Positive

Negative
 25.
If a company's accounts payable decreased $16,000 during the year, will the $16,000 appear
as a positive or negative amount on the statement of cash flows?
Positive

Negative

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