Which of the Following Measures a Company's Ability to Pay

question 155

Multiple Choice

Which of the following measures a company's ability to pay current liabilities with current assets?

• A) Net income
• B) Debt ratio
• C) Current ratio
• D) Total assets

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Definitions:

U.S.GAAP

United States Generally Accepted Accounting Principles, which is a framework of accounting standards, principles, and procedures used in the U.S.

Fair Value

An estimate of the market value of an asset or liability based on current market prices or valuations of similar transactions.

Long-Term Construction Projects

Large scale construction endeavors that span over a long period, often requiring special accounting methods like the percentage-of-completion method for revenue recognition.

Percentage-Of-Completion Method

An accounting method used to recognize revenue and expenses of long-term contracts as a proportion of the work completed during the period.