Pinecrest Company
Use the Selected Data from Pinecrest Company's Financial

Pinecrest Company
Use the selected data from Pinecrest Company's financial statements to answer the following question.
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$\begin{array}{lrr}&2018&2017\\\text { Cash } & \$ 22,000 & \$ 14,000 \\\text { Accounts receivable } & 42,000 & 16,000 \\\text { Merchandise inventory } & 22,000 & 83,000 \\\text { Prepaid expenses } & 23,000 & 18,000 \\\text { Total current assets } & \$ 109,000 & \$ 131,000\\\\\text { Total current liabilities } & \$ 65,000 & \$ 72,000 \\\text { Net credit sales } & 221,000 & 326,000 \\\text { Cost of goods sold } & 168,000 & 299,000 \\\text { Net cash flow from operating activities } & 16,000 & 29,000\end{array}$ ​
-Refer to the data for Pinecrest Company.
Which of the following statements is true?

A) The current ratio increased from 2017 to 2018.
B) The acid-test ratio decreased from 2017 to 2018.
C) The amount of working capital decreased from 2017 to 2018.
D) Assuming extreme conditions do not exist,the company appears to be in a worse position to pay its current debts at the end of 2018 compared to 2017.

Correct Answer:

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