Practice prompt · Q:statement-presentation-comprehensive-income-and-disclosure/classification-and-working-capital-001

Recompute working capital after a reclassification

Tests whether the learner traces a current and noncurrent reclassification through working capital and the current ratio.

Updated Aug 18, 2026 Review due Nov 18, 2026

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Current assets are 480,000 and current liabilities are 300,000. A 60,000 note payable previously shown as noncurrent is found to mature in eight months and is reclassified as current.

The classification line is where the balance sheet's judgment concentrates. Nothing about the obligation changed; only the date it was measured against did, and two liquidity measures moved because of it.

Choose the best answer. a Working capital falls to 120,000 and the current ratio falls to 1.33. b Working capital falls to 120,000 and the current ratio stays at 1.60. c Working capital stays at 180,000 because total assets and total liabilities are unchanged. d Working capital falls to 120,000 and the current ratio rises to 1.60.

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Answer: a

Choice a. Current liabilities become 360,000, so working capital is 120,000 and the current ratio is 1.33.