Which of the Following Is Included in the Denominator of the Acid-Test

question 96

Multiple Choice

Which of the following is included in the denominator of the acid-test ratio?

• A) All current liabilities except accounts payable
• B) Total liabilities
• C) Total current liabilities
• D) Total current assets

---

Definitions:

Product Warranty Expense

The estimated cost of repairing or replacing products under warranty, recognized as an expense by a company.

Sales

This refers to the total revenue a company generates from selling goods or services to customers within a specific period.

Medicare Tax

A payroll tax that funds the Medicare program, which provides health insurance for eligible elderly and disabled individuals.

Employer's Payroll Taxes

Taxes that employers are required to pay on behalf of their employees, such as social security and Medicare taxes.