Judith Corp

question 41

Multiple Choice

Judith Corp.has current assets worth $50,000 and current liabilities worth $75,000.Current assets include inventory of $10,000.Calculate acid test ratio.

• A) 1.500
• B) 0.533
• C) 0.625
• D) 0.667

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Definitions:

Goodwill Impairment

A reduction in the book value of goodwill, which occurs when the carrying amount of goodwill exceeds its fair value, indicating that the asset is not as valuable as previously thought.

Reporting Units

Segments or components of a business for which discrete financial information is available and reviewed by the operating segment's management.

Equity Method

An accounting technique used by a company to record its investment in another company, where the investment's value is adjusted in accordance with the investee's performance.

Partial Equity Method

An accounting method used for investments, where the investor recognizes its share of the investee's earnings, but adjustments are less comprehensive than under the full equity method.