Which One of the Following Is Not True of the Acid

question 4

Multiple Choice

Which one of the following is not true of the acid test ratio?

• A) It is a measure of the very short-term liquidity of a business.
• B) You would expect the acid test ratio of a cash business to be lower than that for a credit business.
• C) The acid test ratio will always be greater than the current ratio.
• D) The higher the acid test ratio, the better the liquidity of the business.

---

Definitions:

Rock Formations

Naturally occurring arrangement of rocks in the environment, often characterized by unique shapes and compositions.

Excavation

The process of removing soil, rock, or other materials from a site to form a hole, cavity, or to uncover something buried.

Preexisting Legal Obligation

An obligation that existed before the current situation or agreement, which may affect the validity of a new contract.

Outputs Contract

An agreement in which the seller agrees to sell all of the production at its facility to a buyer, who agrees to purchase it, often used in industrial or farming contexts.