The Two Categories of Ratios That Should Be Utilized to Assess

question 63

Multiple Choice

The two categories of ratios that should be utilized to assess a firm's true liquidity are the

• A) liquidity and profitability ratios.
• B) liquidity and debt ratios.
• C) current and quick ratios.
• D) liquidity and activity ratios.

---

Definitions:

Liability Accounts

Accounts on a company's balance sheet that represent what the company owes to others, such as loans, accounts payable, mortgages, and accrued expenses.

Journal Entries

The recording of financial transactions into the accounting records, specifying the accounts affected by those transactions.

Standard Format

A predefined layout or structure used to present data or information consistently.

Office Equipment

Assets such as computers, desks, and chairs used in an office environment to support business operations.