If a Company Has an Acid-Test Ratio of 1 $\quad$ Collection of Receivable
A

question 167

Short Answer

If a company has an acid-test ratio of 1.2:1, what respective effects will the borrowing of cash by short-term debt and collection of accounts receivable have on the ratio? Short-term Borrowing $\quad$ Collection of Receivable
a. $\quad$$\quad$ Increase $\quad$$\quad$$\quad$ No effect
b. $\quad$$\quad$ Increase $\quad$$\quad$$\quad$ Increase
c. $\quad$$\quad$ Decrease $\quad$$\quad$$\quad$ No effect
d $\quad$$\quad$ Decrease $\quad$$\quad$$\quad$ Decrease

Grasp how initial assets contributions are valued in partnerships.

Understand the impact of withdrawals and the addition of net income on partner's capital accounts.

Ability to apply income division rules according to partnership agreements and activities.

Understand how net income is divided among partners based on capital, salaries, and predetermined ratios.

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Definitions:

Relative Cheaper

The comparison of the cost of one product or service to another, indicating that the former is less expensive.

Labor-Intensive

Describing a process or industry that requires a large amount of labor to produce its goods or services.

Comparative Advantage

The ability of a country or firm to produce a particular good or service at a lower opportunity cost than its competitors, which enhances efficiency in international trade.

Production Possibilities

A curve or frontier representing the maximum combination of goods and services that can be produced efficiently with available resources and technology.