What Is the Acid-Test Ratio for a Merchandiser Having the Following

question 100

Multiple Choice

What is the acid-test ratio for a merchandiser having the following balances? (Round to two decimal places.)

• A)0.93
• B)0.40
• C)0.64
• D)1.76

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Definitions:

Doubtful Accounts

Doubtful accounts represent receivables that a company is uncertain to collect, typically categorized separately to reflect potential losses.

Cash Discount

A reduction in the invoice amount by the seller if the buyer pays their bill within a specified time frame, incentivizing prompt payment.

Retail Customers

Individuals who purchase goods and services for personal use from retailers, as opposed to wholesale customers.

Financing Charge

Interest or fees paid by a borrower for the use of credit or the extension of existing credit.