All of the following regarding current ratio are true except: Current ratio is c
ID: 2452173 • Letter: A
Question
All of the following regarding current ratio are true except: Current ratio is calculated by dividing current assets by current liabilities. Current ratio helps to assess a company's ability to pay its debts tn the near future. Current ratio does not affect a creditor's decision on when to allow a company to buy on credit. Current ratio can affect a creditor's decision about whether to lend money to a company. Current ratio can reveal problems in a company if it is less than 1. The following information is available for the Travis Travel Agency. After these closing entries what will be the balance in the Jay Travis, Capital account? Total revenues $125,000 Total expenses 60.000 Jay Travis, Capital 80.000 Jay Travis, Withdrawals 15.000 $ 65.000. $ 80.000. $ I30.000. $ I45.000.$ 280.000. The Income Summary account is used: To adjust and update asset and liability accounts. To close the revenue and expense accounts. To determine the appropriate withdrawal amount. To replace the income statement To replace the capital account in some businesses.Explanation / Answer
Answer (8) All statement aretrue except (C) that current ratio doesn't affect a creditor's decision on when to allow a company to buy on credit
Answer (9) Answer (C) 130000
Answer: 10 Income summary account is used (B) to close revenue and expense account.
Total Revenues 125000 Less: Total Expenses -60000 Net Income transfer to capital 65000 Add opening capital 80000 Less: Withdrawals -15000 Balance in Jay Travis capital account 130000