The Acid-Test Ratio Differs from the Current Ratio in That

question 30

Multiple Choice

The acid-test ratio differs from the current ratio in that:

• A)Liabilities are divided by current assets.
• B)Prepaid expenses and inventory are excluded from the calculation of the acid-test ratio.
• C)The acid-test ratio is a measure of profitability but the current ratio does not.
• D)The acid-test ratio excludes short-term investments from the calculation.
• E)The acid-test ratio is a measure of liquidity but the current ratio is not.

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Definitions:

Business Ethics

Guidelines and principles that govern the conduct and decision-making process within a business environment.

Internal Force

Forces within an organization that affect its operations, such as employee motivation, company culture, and internal processes.

Organizational Change

Modification of structures and processes within an organization, often aimed at improving efficiency, effectiveness, and overall performance.

Labor Union

An organized association of workers, often in a trade or profession, formed to protect and further their rights and interests.