What Is the Primary Criterion for the Preparation of Managerial

question 91

Multiple Choice

What is the primary criterion for the preparation of managerial accounting reports?

• A) relevance of the reports
• B) manager needs
• C) timing of the reports
• D) cost of the reports

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Definitions:

Working Capital

The difference between a company's current assets and its current liabilities, indicating the liquidity available to run its operations.

Current Ratio

A measure of a business's capacity to cover its short-term liabilities, found by the ratio of current assets to current liabilities.

Acid-Test Ratio

A strict metric used to assess if a business possesses sufficient current assets to meet its short-term obligations without the need to liquidate inventory.

Times Interest Earned

A financial metric indicating how many times a company can cover its interest obligations with its earnings before interest and taxes.