If the Current Ratio of a Company Equals 2

question 144

True/False

If the current ratio of a company equals 2.1, the quick ratio will always be lower than 2.1. (Assume that the company also has inventory and prepaid expenses.)

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Definitions:

Accounting Period

A specific period of time for which financial statements are prepared, often a year or a quarter.

Ledger Accounts

Detailed financial records maintained within the ledger, tracking transactions related to specific assets, liabilities, equity, income, and expenses.

Dividends Account

An account that records the dividends declared by a corporation to be distributed to its shareholders.

Net Income

The total profit of a company after all expenses, including taxes, have been deducted from revenues.