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

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Definitions:

Average Total Cost

The total cost divided by the number of goods produced; it includes all variable and fixed costs.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it varies with production levels.

Average Fixed Cost

The constant expenses associated with production, which remain unaffected by the amount of goods produced, divided by the number of items made.

Average Variable Cost

The total variable cost of production divided by the quantity of output produced.