The Current Ratio Is Calculated by Dividing

question 51

Multiple Choice

The current ratio is calculated by dividing

• A) current assets by owners' equity.
• B) current assets by current liabilities.
• C) income by operating expenses.
• D) net sales after taxes by net sales.
• E) accounts receivable by inventory turnover.

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Definitions:

Equivalent Units

A method used in managerial accounting to calculate the number of complete units that could have been produced given the total amount of materials and effort expended.

Production Period

The Production Period is the phase in a manufacturing process when resources are used to convert raw materials into finished products.

Output

The quantity of goods or services produced in a given time period by a company, industry, or country.

Job Order Cost System

An accounting system that accumulates manufacturing costs separately for each order, suitable for businesses producing customized products or offering specialized services.