Question

Linden Company provided the following information:
Current assets ..... $ 6,930
Current liabilities ..... 6,413
Liquid assets ...... 2,001
Total assets ....... 25,327
Total liabilities ..... 13,453
Required:
A. Calculate the current and quick ratios.
B. Assume that management misclassified some of its investments as trading securities when in fact these securities should have been classified as held- to- maturity securities. Therefore, the liquid assets should be only $ 920. What is the impact on the current and quick ratios?
C. Why is investment classification important for external financial statement users?


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  • CreatedMarch 25, 2015
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