Question

The trial balance of a company included the following account balances: Cash, $25,000; Short-Term Investments, $10,000; Accounts Receivable, $40,000; Inventory, $90,000; and Prepaid Insurance, $12,000. Its quick assets total:

A. $35,000
B. $125,000
C. $75,000
D. $165,000
E. $50,000

Answer 1

Answer:

C. $75,000

Explanation:

All the current assets which can be quickly converted into cash are the quick assets. Inventory and Prepaid Insurance are not the p[art of this because these take much longer time to convert into cash than other current assets. Receivable has more liquidity than inventory because it takes less time to recover.

Cash                                 $25,000

Short-Term Investments $10,000

Accounts Receivable      $40,000

Total Quick Assets          $75,000

Answer 2

Answer:

Its quick assets total is $75,000. The right answer is C.

Explanation:

In order to calculate the company's quick assets total we need to check according to the data, which of the account balances of the company are quick assets.

Hence, Quick assets are the following:

Cash $ 25,000

Short Term Investments $10,000.

Accounts Receivable $40,000.

Therefore, Total Quick Assets=$ 25,000+ $10,000+ $40,000= $75,000