Question

what is the current ratio given the following information?
current assets = $750
inventory = $275
current liabilities = $1075

0.81
0.70
0.95
0.65

question 8 (10 points)
during the closing process, which of the following would likely occur?

debit revenue and credit income summary
debit cash and credit income summary
debit earned income and credit income summary
debit assets and credit income summary

question 9 (10 points)
which of the following are permanent accounts that roll over to the next accounting period?

assets
revenue
expenses
dividends

Explanation:

Calculate the Current Ratio

$$ \text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}} = \frac{750}{1075} \approx 0.6977 \approx 0.70 $$

Identify the closing process entry

Closing revenue accounts requires debiting the revenue accounts (to reduce their balances to zero) and crediting the Income Summary account.

Identify permanent accounts

Permanent accounts consist of assets, liabilities, and equity accounts. Revenue, expenses, and dividends are temporary accounts closed at the end of each period. Therefore, Assets is the permanent account.

Answer:

Question 1

• 0.81
• 0.70 (Correct answer)
• 0.95
• 0.65

Question 8

• Debit Revenue and Credit Income Summary (Correct answer)
• Debit Cash and Credit Income Summary
• Debit Earned Income and Credit Income Summary
• Debit Assets and Credit Income Summary

Question 9

• Assets (Correct answer)
• Revenue
• Expenses
• Dividends