Answer (B) is correct . Current liabilities can be calculated using the following relationship: Acid test ratio = Quick assets ¡Â Current liabilities 2.6 = $208,000 ¡Â Current liabilities Current liabilities ¡Á 2.6 = $208,000 Current liabilities = $208,000 ¡Â 2.6 = $80,000
Answer (A) is incorrect because The current liabilities at year end are determined using the quick assets total and the acid test ratio:? Current liabilities equals the quick assets divided by the acid test ratio.
Answer (C) is incorrect because The current liabilities at year end are determined using the quick assets total and the acid test ratio:? Current liabilities equals the quick assets divided by the acid test ratio.
Answer (D) is incorrect because The current liabilities at year end are determined using the quick assets total and the acid test ratio:? Current liabilities equals the quick assets divided by the acid test ratio.
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Tilghman Company’s current liabilities at December 31 equal
