The Quick Ratio Improves Upon the Current Ratio by

question 51

Multiple Choice

The quick ratio improves upon the current ratio by

• A) using more up-to-date information.
• B) simplifying the calculation.
• C) subtracting intangible assets like goodwill.
• D) recognizing that inventory is the current asset that is easiest to value.
• E) recognizing that inventory is the least liquid current asset.

---

Definitions:

Conversion Costs

Costs required to transform raw materials into finished products, combining direct labor and manufacturing overhead.

FIFO Method

"First in, first out," an inventory valuation method that assumes goods are sold in the order they were acquired or produced.

Beginning Work

Refers to the initial stages or processes of starting a project, task, or job in a business or manufacturing setting.

Conversion Costs

The combination of labor costs and overhead expenses associated with the conversion of raw materials into finished products.