The Current Ratio Is

question 151

Multiple Choice

The current ratio is

• A) calculated by dividing current liabilities by current assets.
• B) used to evaluate a company's liquidity and short-term debt paying ability.
• C) used to evaluate a company's solvency and long-term debt paying ability.
• D) calculated by subtracting current liabilities from current assets.

Comprehend the principles of liability recognition and measurement, including contingent liabilities and instalment payments.

Master the concepts related to the effective-interest method and its application in financial reporting.

Learn the accounting treatments for different types of loans and payables, including interest calculations and loan repayments.

Differentiate between financial and non-financial liabilities and their respective accounting treatment.

---

Definitions:

Indorser

A person who signs a document, typically a negotiable instrument, indicating their intention to transfer the document to someone else.

Transferor

The party who transfers rights or property to another party, the transferee.

Unauthorized Signature

The signing of a document by a person who does not have the legal authority or permission to do so.

Instrument

A formal legal document that evidences an agreement, right, or obligation, such as a contract, will, promissory note, or share certificate.