What Is the Most Commonly Used Measurement Basis

question 22

Multiple Choice

What is the most commonly used measurement basis?

• A)Current cost.
• B)Realizable value.
• C)Historical cost.
• D)Present value.

---

Definitions:

Debt-to-Equity Ratio

A financial measure reflecting the mix of equity and debt financing used to support a company's assets.

Acid-test Ratio

A stringent indicator of a company's short-term liquidity, measuring its ability to cover short-term liabilities with its most liquid assets, excluding inventory.

Working Capital

A financial metric representing the operational liquidity available to a business, calculated as current assets minus current liabilities.

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate if the stock is undervalued or overvalued.