Question

the current ratio includes at the of the following except:
current assets
current liabilities
prepaid expenses

question 5 (10 points)
working capital includes which of the following?
deferred expenses and depreciation
current assets and current liabilities
owners capital and cash
accounts receivables and owners withdrawal

question 6 (10 points)
what is the current ratio given the following information?
current assets = $477.50
inventory = $275
current liabilities = $1075
0.70
0.45
0.33
0.60

Explanation:

Analyze the first question on Current Ratio components

The first question asks: "The Current Ratio includes all of the following Except:"
The formula for the current ratio is:

$$\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}$$

Prepaid expenses are a component of current assets, so they are included in the calculation.
However, looking at the options:

• Current Assets (included)
• Current Liabilities (included)
• Prepaid Expenses (included as part of Current Assets)

Since this is an incomplete question stem ("includes at the of the following Except:"), let's evaluate standard accounting definitions. Prepaid expenses are indeed current assets. If the question is asking what is excluded from the formula directly, or if there is a typo in the question stem, we look at the direct components of the ratio: Current Assets and Current Liabilities. Prepaid expenses are a sub-component of Current Assets, but they are not a direct primary term in the ratio formula itself. Alternatively, if the question meant "Quick Ratio", prepaid expenses would be excluded. Given the options, "Prepaid Expenses" is the only item that is a specific account rather than a broad category of the formula.

Analyze Question 5 on Working Capital components

Question 5 asks: "Working Capital includes which of the following?"
The formula for working capital is:

$$\text{Working Capital} = \text{Current Assets} - \text{Current Liabilities}$$

Therefore, working capital includes current assets and current liabilities.

Analyze Question 6 on calculating the Current Ratio

Question 6 asks: "What is the Current Ratio given the following information?"
Given:

• \(\text{Current Assets} = \$477.50\)
• \(\text{Inventory} = \$275\) (Note: Inventory is already a part of Current Assets, so we do not add or subtract it)
• \(\text{Current Liabilities} = \$1075\)

Calculate the ratio:

$$\text{Current Ratio} = \frac{477.50}{1075} \approx 0.4442$$

Rounding to two decimal places gives \(0.44\), which is closest to the option \(0.45\).

Answer:

Question 1

• Current Assets
• Current Liabilities
• Prepaid Expenses (Correct answer)

Question 5

• Deferred expenses and Depreciation
• Current assets and Current liabilities (Correct answer)
• Owner's Capital and Cash
• Accounts Receivables and Owner's Withdrawal

Question 6

• 0.70
• 0.45 (Correct answer)
• 0.33
• 0.60