Which of the Following Statements Is TRUE

question 4

Multiple Choice

Which of the following statements is TRUE?

• A)The current ratio is current assets divided by current liabilities.
• B)Total asset turnover is net income divided by total assets.
• C)The cash coverage ratio equals cash divided by current liabilities.
• D)The quick ratio equals current assets - current liabilities divided by current liabilities.

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Definitions:

Spot Rate

The current market price for immediately exchanging one currency for another.

Forward Contract

A binding financial agreement to buy or sell an asset at a predetermined future date and price.

Journal Entries

The foundation of the double-entry bookkeeping system, journal entries record all financial transactions in a company's accounting system.

Forward Contract

An individually tailored pact between two sides for the buying or selling of an asset at an agreed price on a future date.