What is the relationship between the definition of an operating cycle and the definition of current assets?
Current assets are those that will be used within one operating cycle. The length of the operating cycle determines what is considered a current asset.
What does the term solvency mean and which ratio is a measure of it?
Ability to pay debts when due; current ratio
Your firm began the year with $9000 in assets and ended the year with $11,000. After deductions for $100 in interest, your firm showed a $2000 net income for the period. What is your firm's return on assets?
$400,000 of your firm's funds are deposited in an escrow account where they will be held for many months and possibly years until a law suit is resolved. While on deposit, you may not access those funds. Briefly describe whether the $400,000 should appear on your year-end balance sheet and if so, where it should/should not be reported.
Escrow is restricted cash. It would be on the balance sheet in as either a current or long-term asset (depending on when the restriction expires).