Which Type of Ratio Measures the Dollars of Current Assets

question 47

Multiple Choice

Which type of ratio measures the dollars of current assets available to pay each dollar of current liabilities?

• A)Cross-section
• B)Current
• C)Internal-growth
• D)Quick or acid test

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Definitions:

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting wear and tear over time.

Double-Declining-Balance Method

A form of accelerated depreciation method where an asset's book value is reduced at double the rate of its straight-line depreciation.

Units-Of-Production Method

A depreciation method that allocates an asset's cost based on its usage, output, or units of production rather than the passage of time.

Units-Of-Output Method

A depreciation method where the expense is calculated based on the units produced by the asset.