Which of the Following Is Indicative of the Relationship Between

question 56

Multiple Choice

Which of the following is indicative of the relationship between the current ratio and the quick (acid test) ratio?

• A) The current ratio is based on a more conservative measure of liquidity.
• B) Both ratios focus on the relationship between all or part of a company's current assets and all of its current liabilities.
• C) Both ratios focus on the relationship between all of a company's current assets and all or part of its current liabilities.
• D) For a company that carries no inventories, the current ratio and acid test ratio will be significantly different.

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Definitions:

Freedom of Choice

The right of individuals to make decisions for themselves without undue government restriction.

Society's Wants

The collective desires and needs of a community or society that drive demand and economic activity.

Exchange and Trade

The act of giving one thing and receiving another between two parties, typically involving goods, services, or both.