Which of the Following Are Components of the Current Ratio

question 11

Multiple Choice

Which of the following are components of the current ratio?

• A)Accounts receivable and short term investments
• B)Inventory, retained earnings, and accounts payable
• C)Accounts payable, dividends, and cash
• D)Short term investments, equipment, and land

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Definitions:

Profit Centers

Divisions or departments within a business that are responsible for generating their own revenue and profit.

Indirect Operating Expenses

Indirect operating expenses are costs associated with running a business that cannot be directly tied to a specific product or service, such as utilities, rent, and administrative salaries.

Allocating

The process of assigning or distributing resources or costs among various accounts, projects, or entities.

Residual Income

The amount of income that an individual or company has after all personal debts and expenses, including the cost of capital, have been paid.