Ratios That Measure the Degree of Protection for Long-Term Creditors

question 83

Multiple Choice

Ratios that measure the degree of protection for long-term creditors and investors or the ability to meet long-term obligations are called

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

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Definitions:

Accounts Payable Subsidiary Ledger

A ledger containing all account details of amounts owed by a business to its suppliers or creditors, facilitating more detailed tracking alongside the general ledger.

Payment For Supplies

The monetary expenditure for obtaining supplies necessary for the operation of a business.

Monthly Adjustment

A routine accounting process for updating financial statements and records to reflect changes and transactions that occurred within a month.

Supplies Used

The amount of materials and goods utilized during a specific period for the operation of a business.