The Acid-Test Ratio Includes in the Numerator All

question 127

Multiple Choice

The acid-test ratio includes in the numerator all:

• A)current assets.
• B)current assets except cash.
• C)current assets except cash and prepaid expenses.
• D)current assets except prepaid expenses and inventory.

---

Definitions:

Probability of Nonpayment

The likelihood or risk that a borrower will not fulfill their payment obligations on a loan or debt.

Revenue

The total amount of money received by a company for goods sold or services provided during a specific period.

Cash Discount

An incentive offered by sellers to encourage buyers to pay earlier, resulting in a reduction in the amount due.

Captive Finance Company

A finance company that is wholly owned by a parent company, primarily for the purpose of providing financing to the customers of the parent company.