The Acid-Test (Quick) Ratio

question 220

Multiple Choice

The acid-test (quick) ratio

• A) is used to quickly determine a company's solvency and long-term debt paying ability.
• B) relates cash, short-term investments, and net receivables to current liabilities.
• C) is calculated by taking one item from the income statement and one item from the statement of financial position.
• D) is the same as the current ratio except it is rounded to the nearest whole percent.

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Definitions:

Right-to-work Laws

Legislation that prohibits unions from requiring union membership as a condition of employment.

Union Membership

The status of being a member of a labor union, which is an organization that represents workers' interests to employers, particularly concerning wages and working conditions.

Wage

The price paid for the use or services of labor per unit of time (per hour, per day, and so on).

Salary Workers

Individuals who receive a fixed regular payment, often monthly, from their employer, regardless of the number of hours worked.