Which of the Following Is a TRUE Statement About a Company

question 86

Multiple Choice

Which of the following is a TRUE statement about a company?

• A)The owners of a company have co- ownership of the property of the company.
• B)A company has a limited life.
• C)A company is not taxed on the company's business income.
• D)The owners of a company have limited liability for the company's debts.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the operating cycle of the business, whichever is longer.

Current Liabilities

Financial obligations a company owes and is required to settle within a year.

Acid-Test Ratio

A financial metric that measures a company's ability to meet its short-term obligations with its most liquid assets.

Current Ratio

A liquidity ratio that measures a company's ability to pay off its short-term liabilities with its short-term assets.