In General, Activities and Costs on Different Levels in the Cost

question 197

True/False

In general, activities and costs on different levels in the cost hierarchy-such as unit-level and batch-level costs and activities--should be combined in an activity-based costing system if doing so simplifies the costing system.

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Definitions:

Current Ratio

A measure of a business's capacity to cover its short-term liabilities, found by the ratio of current assets to current liabilities.

Acid-Test Ratio

A strict metric used to assess if a business possesses sufficient current assets to meet its short-term obligations without the need to liquidate inventory.

Times Interest Earned

A financial metric indicating how many times a company can cover its interest obligations with its earnings before interest and taxes.

Debt-To-Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets, used as a measure of financial health.