The Ratio That Is Used to Assess the Liquidity of Accounts

question 100

Multiple Choice

The ratio that is used to assess the liquidity of accounts receivable is the

• A) current ratio.
• B) receivables turnover ratio.
• C) quick ratio.
• D) inventory turnover ratio.

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Definitions:

Journal Entry

A record in the accounting ledger that represents a single transaction and its effects on various accounts, detailing debits and credits.

Subsidiary Ledger

A subsidiary ledger is a detailed ledger that contains account information related to a specific master ledger account.

Allowance Account

An account used in accounting to estimate and offset losses that may arise from receivables that are not likely to be collected.

Dishonored Note

A promissory note that has not been paid by the debtor at the time it is due.