In the kitchen remodel file, current assets are $96,000 and current liabilities are $64,000. What is the current ratio?
Correct Answer
B) 1.50.
Current ratio is current assets divided by current liabilities: $96,000 / $64,000 = 1.50.
Why This Is the Correct Answer
Current ratio is current assets divided by current liabilities: $96,000 / $64,000 = 1.50.
Why the Other Options Are Wrong
Option A: 0.67.
0.67. is below the supported result for current ratio; it likely uses the wrong base, period, or account bucket.
Option C: 1.00.
1.00. is below the supported result for current ratio; it likely uses the wrong base, period, or account bucket.
Option D: 2.00.
2.00. is above the supported result for current ratio; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Current Ratio drawer for Reviewing Liquidity: label assets before counting dollars.
Reference Hint
Study anchor (closed-book): memorize Current ratio from CSLB Law and Business Study Guide; California tax and payroll guidance / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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