Which of the Following Would You Calculate If You Were

question 27

Multiple Choice

Which of the following would you calculate if you were concerned about your financial resources with regards to unplanned money emergencies?

• A) liability ratio
• B) debt ratio
• C) long-term debt coverage ratio
• D) current ratio
• E) none of the above

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Definitions:

Final Trial Balances

The summary of all ledger accounts after adjusting entries are made, used to prepare financial statements at the end of an accounting period.

Accounting Cycle

The series of steps in processing financial transactions, from the initial recording to the preparation of financial statements.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Current Liabilities

Financial commitments that need to be settled within a year or during the regular operation period of a company.