The Acid-Test Ratio of a Firm Would Be Unaffected by Which

question 21

Multiple Choice

The acid-test ratio of a firm would be unaffected by which of the following?

• A) Accounts payable are reduced by obtaining a short-term loan.
• B) Common stock is sold and the money is invested in marketable securities.
• C) Inventories are sold for cash.
• D) Inventories are sold on a short-term credit basis.

---

Definitions:

Standard Cost System

An accounting system that uses predetermined costs for products and services to help managers control costs by comparing them with actual costs.

Raw Materials

The basic materials and components required to start the production process.

Standard Cost Card

A detailed listing of the standard amounts of inputs and their costs that are required to produce a unit of a specific product.

Standard Cost System

An accounting system that uses cost estimates for materials, labor, and overhead to control costs and assess operational efficiency.