The Relationship Between Current Assets and Current Liabilities Is

question 34

Multiple Choice

The relationship between current assets and current liabilities is

• A)useful in determining income.
• B)useful in evaluating a company's liquidity.
• C)called the matching principle.
• D)useful in determining the amount of a company's long-term debt.

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Definitions:

Receivables Financing

A type of financing where a company uses its accounts receivable as collateral to secure short-term financing, improving liquidity.

Operating Cycle

The time period between the acquisition of inventory by a business and the collection of cash from accounts receivable.

Inventory

The total amount of goods or materials held by a company for the purpose of resale or production.

Credit Card

A payment card issued to users as a method of payment allowing the cardholder to pay for goods and services based on the holder's promise to pay for them.