Ratios That Measure How Effectively an Entity Is Using Is

question 76

Multiple Choice

Ratios that measure how effectively an entity is using is assets are called

• A) liquidity ratios.
• B) activity ratios.
• C) solvency ratios.
• D) profitability ratios.

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Definitions:

Work in Process

Goods that are in various stages of production within a manufacturing process but are not yet completed products.

FIFO Method

"First-In, First-Out," an accounting method for valuing inventory that assumes the first items purchased or produced are the first ones sold.

Cost Reconciliation

A process of verifying and adjusting the cost of a product or project by comparing budgeted or standard costs to actual incurred costs.

Weighted Average Method

An inventory costing method that assigns an average cost to each unit of inventory, considering the units' weights in the calculation.