Which Statement Below Best Describes the Quick (Acid Test)ratio

question 4

Multiple Choice

Which statement below best describes the quick (acid test) ratio?

• A)The acid test ratio considers only the most liquid assets: cash,accounts receivable,and temporary investments.
• B)The current ratio includes only the assets most easily converted into cash.
• C)The acid test adds merchandise inventory and prepaid expenses in the computation of current assets.
• D)None of these answers is correct.

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Definitions:

Dividends

are payments made by a corporation to its shareholders, typically from profits earned.

Tax Rate

The percentage of income that is paid to the government as tax.

Net Income

The amount of profit a company has left after all expenses, taxes, and costs have been subtracted from total revenue.