Company acid-test-quick ratio


Question 1: Trapp Company uses the weighted-average method in its process costing system. The beginning work in process inventory in its Painting Department consisted of 3,000 units that were 70% complete with respect to materials and 60% complete with respect to conversion costs. The cost of the beginning work in process inventory in the department was recorded as $10,000. During the period, 9,000 units were completed and transferred on to the next department. The costs per equivalent unit for the period were $2.00 for material and $3.00 for conversion costs. The cost of units transferred out during the month was:

A)    $39,600. C)    $45,400.
B)    $45,000. D)    $35,400.

Question 2: Eral Company has $17,000 in cash, $3,000 in marketable securities, $36,000 in current receivables, $24,000 in inventories, and $45,000 in current liabilities. The company's acid-test (quick) ratio is closest to:

A)    1.78 to 1. C)    0.80 to 1.
B)    1.24 to 1. D)    0.44 to 1.

Question 3: Compute the amount of direct materials used during November if $20,000 in raw materials were purchased during the month and if the inventories were as follows:

Balance    Balance
November 1    November 30
Raw materials       $ 4,000    $ 3,000
Work in process     12,000    15,000
Finished goods       24,000    27,000

A)    $21,000. C)    $18,000.
B)    $19,000. D)    $15,000.

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Accounting Basics: Company acid-test-quick ratio
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