;He ____ Ratio, Sometimes Called the "Acid Test," Is a More

question 45

Multiple Choice

;he ____ ratio, sometimes called the "acid test," is a more stringent measure of ____ than the current ratio.

• A) quick; liquidity
• B) fixed-asset turnover; activity
• C) net profit margin; gross profit margin
• D) equity; activity

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Definitions:

Outstanding Checks

Checks that have been issued and recorded in the issuing party's records but have not yet been cashed or cleared by the bank.

Deposits in Transit

Deposits in transit are amounts that have been received and recorded by a business but have not yet been reflected in the bank's records.

Bank Reconciliation

The act of reconciling the cash account balances recorded in an organization's bookkeeping with the related data found on a bank statement.

Deposits in Transit

Funds that have been received and recorded by a business but not yet processed by the bank.