Current assets are $75,000 and current liabilities are $95,000. What does this suggest?
Correct Answer
B) Liquidity concern.
Current liabilities exceed current assets, which is a liquidity concern.
Why This Is the Correct Answer
Current liabilities exceed current assets, which is a liquidity concern.
Why the Other Options Are Wrong
Option A: Strong working capital.
Strong working capital. puts the item in the wrong financial bucket, timing, base, or comparison for liquidity analysis.
Option C: No liabilities exist.
No liabilities exist. puts the item in the wrong financial bucket, timing, base, or comparison for liquidity analysis.
Option D: Revenue doubled.
Revenue doubled. puts the item in the wrong financial bucket, timing, base, or comparison for liquidity analysis.
Memory Technique
Reviewing Balance money test: bucket before math for liquidity analysis.
Reference Hint
Study anchor (closed-book): memorize Liquidity analysis from CSLB Law and Business Study Guide; CSLB 2026 Law Book / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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