Which of the Following Statements Is TRUE

question 49

Multiple Choice

Which of the following statements is TRUE?

• A) In an annuity due payments occur at the end of the period.
• B) In an ordinary annuity payments occur at the end of the period.
• C) A perpetuity will mature at some point in the future.
• D) One cannot calculate the present value of a perpetuity.

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Definitions:

Average Collection Period

The average number of days it takes for a business to receive payments owed by its customers for sales made on credit.

Charge Customer

The process of recording or billing a customer for goods sold or services rendered, reflecting an obligation for payment.

Acid Test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with quick assets, such as cash, marketable securities, and accounts receivable, without selling inventory.

Acid Test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its quick assets (cash, marketable securities, and receivables).