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:

Blanket Lien

A type of lien that gives the creditor the rights to seize nearly all types of assets and property of the debtor in the event of default.

Trade Credit

A type of commercial financing where a buyer is allowed to purchase goods or services and pay the supplier at a later scheduled date.

Net Period

The time period within which a net payment is due after any discounts are applied.

Compensating Balance

A minimum balance that must be maintained in a bank account, usually as a condition for obtaining a loan or line of credit.