100% CORRECT ANSWERS
◉ t/f: The indirect method (preferred method) of determining cash
flows from operations starts with net income. Answer: t
◉ t/f: A business that is considered "Liquid" has a shortage of cash
and does not have the ability to convert its current assets to cash..
Answer: f
◉ t/f: Working capital is best defined as the total of total assets plus
total liabilities. Answer: f
current assets - current liabilities
◉ t/f: A company with a Current Ratio (CA/CL)of 2.5 to 1 has
enough current assets available to meet its current liability
obligations.. Answer: t
◉ t/f: Current assets are defined as cash and items that will be
converted to cash sometime after the next 12 months. Answer: f
◉ t/f: Net losses increase Retained Earnings of a corporation..
Answer: f