Liquidity ratios measure the ability to meet short-term obligations. A commonly used liquidity ratio is the acid-test or quick ratio, which equals the sum of the quick assets net accounts receivable, financial assets held for trading. and cash) divided by current liabilities. This ratio at the end of Year 1 is 2.0 [(US $5,000 + $3,000 + $16,000) -$12,000]. RST Corporation's Income Statement for Year 5 and Year 6

The beginning balance of gross accounts receivable (A/R) was US $5.000debit). Thus net beginning A/R was US $4,500$5,000 - $660 credit in the allowance for bad debts. The allowance was credited for the US $2,000 bad debt expense. Accordingly, the ending allowance credit) was US $1 .500$500 - $1.000 write-off - $2,000)_ CT...9n a US $30.000 increase net A/R. ending net A/R must have been US $34,500$4,500 beginning net A/R T $30,000), with ending gross ,4/R of US $36,000$34,500 + $1,500). Collections were therefore US $68.000$5,000 beginning gross A/R - $1.000 write-off T $100,000

The most common problem confronting an organization in its use of computers is erroneous or incomplete input. Input is especially susceptible to errors and omissions because of the substantial human intervention required. Comprehensive and effective input controls are necessary ensure that data stored in files or used in processing are not contaminated.

Validity checks are tests of identification numbers or transaction codes for validity by comparison with items already known to be correct or authorized. For example, Social Security numbers on payroll input records can be compared with Social Security numbers authorized by the personnel department.

The vendor would like to sell coffee on cold days US $2,000) and soft drinks on hot days US $2,500). Hot days are expected 40°l0 of the time. Hence, the probability is 40°f0 of making US $2,500 by selling soft drinks. The chance of making US $2,000 by selling coffee is 600k. The payoff equation is:
4 US $2,600) + .6 $2,000 = US $2,200
A beverage stand can sell either soft drinks or coffee on any given day. If the stand sells soft drinks and the weather is hot, it will make US $2,500; if the weather is cold, the profit will be U $1,000. If the stand sells coffee and the weather is hot, it will make US $1,900; if the weather is cold, the profit will be U $2,000. The probability of cold weather on a given day at this time is 60%.