What Is the Objective of the Household Budget

question 12

Multiple Choice

What is the objective of the household budget?

• A)To assure that the household generates enough cash to meet household operating needs.
• B)To provide resources for emergency funds if current assets are insufficient.
• C)To keep track of growth in efficient spending.
• D)Both a and b above.
• E)None of the above.

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Definitions:

Liquidity Ratios

Financial metrics used to assess a company's ability to meet its short-term debt obligations, by comparing current assets to current liabilities.

Debt-Paying Ability

A financial metric used to gauge a firm's capacity to settle its obligations, often assessed through ratios such as the debt to equity or debt service coverage ratios.

Operating Cycle

The duration it takes for a company to buy inventory, sell that inventory, and collect cash from the sale, representing the time it takes to convert resources into cash flows.

Notes Payable

A liability recorded on a balance sheet, representing a written promise to pay a certain amount in the future.