As the Number of Activities Increase in an ABC System

question 12

True/False

As the number of activities increase in an ABC system, measurement error also tends to increase.

---

Definitions:

Working Capital

Current assets less current liabilities.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Acid-Test Ratio

A financial ratio indicating a firm's capacity to settle short-term debts without having to sell its stock.

Marketable Securities

Financial instruments that can be easily converted to cash, such as stocks, bonds, and Treasury bills.