The Most Important Information Needed to Determine If Companies Can

question 125

Multiple Choice

The most important information needed to determine if companies can pay their current obligations is the

• A)profit for this year.
• B)projected profit for next year.
• C)relationship between current assets and current liabilities.
• D)relationship between current and non-current liabilities.

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Definitions:

Income Summary

A temporary account used in the closing process that summarizes a company's revenues and expenses for the accounting period.

Revenue Account(s)

Accounts that track the income generated from the sale of goods or provision of services before any expenses are deducted.

J. Higgins, Withdrawals

The amount of money withdrawn by J. Higgins from a business for personal use, affecting the owner's equity.