The Land Account Would Include All of the Following Costs

question 2

Multiple Choice

The Land account would include all of the following costs except

• A)drainage costs.
• B)the cost of building a parking lot.
• C)title fees.
• D)the cost of tearing down a building.

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Definitions:

Acid-Test Ratio

A stringent test that indicates whether a company has enough short-term assets to cover its immediate liabilities without selling inventory.

Current Liabilities

Current liabilities are a company's debts or obligations that are due within one year.

Liquidity

Refers to how quickly an asset can be converted to cash. Liquid assets can be converted to cash quickly, whereas illiquid assets cannot.

Operating Cycle

The period of time it takes for a business to purchase inventory, sell products, and receive cash from sales.