_____ Measure the Ability of an Organization to Convert Assets

question 84

Multiple Choice

_____ measure the ability of an organization to convert assets into the cash it needs to pay off liabilities that come due in the next year.

• A)Profitability ratios
• B)Activity ratios
• C)Liquidity ratios
• D)Leverage ratios

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Definitions:

Depreciation Expense

The allocated amount of the cost of a tangible or physical asset over its useful life, reflecting the decrease in the asset’s value due to use and/or age.

Correction Of An Error

Adjustments made in financial statements to amend mistakes or omissions in previously issued financial reports.

Reporting Entity

An entity for which there are users who rely on the entity's financial reports for making economic decisions.