PART BUse the information in the following table to answer questions from B1 to B16.[table]
Cash | 40 000 Accounts payable | 280 000 Net fixed assets | 900 000 Cost of materials | 190 000 Accounts receivable | 170 000 Intangibles | 40 000 Interest expenses | 40 000 Issued common stock | 500 000 Sales revenues | 600 000 Inventory | 420 000 Long-term loans | 490 000 Tax | 10 000 Depreciation | 70 000 Administration expenses | 90 000 Short-term debt | 210 000 Labour costs | 140 000 Long-term investments | 80 000 Sales and marketing expenses | 50 000 Revenue reserves | 80 000 Current portion of long-term debt | 90 000
[/table]B1 Calculate total current assets:

Question

BlackTom AI · Accepted Answer

Current assets are assets expected to be converted into cash within one year: typically cash, accounts receivable, inventory, and short‑term (marketable) investments. Long‑lived items such as net fixed assets, long‑term investments, and intangibles are excluded.

Identify current‑asset items from the table:
- Cash = 40,000
- Accounts receivable = 170,000
- Inventory = 420,000
(No short‑term investments are listed; long‑term investments (80,000), net fixed assets (900,000) and intangibles (40,000) are non‑current and excluded.)

Step‑by‑step addition (showing intermediate totals):
- Cash + Accounts receivable = 40,000 + 170,000 = 210,000
- Add Inventory: 210,000 + 420,000 = 630,000

Therefore total current assets = 630,000.

Why this answer is correct:
- The calculation includes exactly the items classified as current assets in the provided data and excludes non‑current items (net fixed assets, long‑term investments, intangibles) and liabilities. The arithmetic shown verifies the sum equals 630,000.

Why the other options are incorrect:
- 2,925,000 is far larger and would require including many non‑current assets and/or duplicating figures; it does not represent total current assets.
- 505,000 does not match the sum of the actual current items (40,000 + 170,000 + 420,000 = 630,000), so it undercounts one or more current asset items.
- 1,500,000 roughly resembles a subtotal of total assets without certain items, but it does not equal the correct current‑asset sum and incorrectly includes non‑current assets.

Confirming final answer: total current assets = 630,000, which matches the provided correct answer.

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