What Does the Acid Test Ratio Eliminate from Its Calculation

question 47

Multiple Choice

What does the acid test ratio eliminate from its calculation, because it is considered the least liquid of the current assets?

• A)Bank bills
• B)Accounts receivable
• C)Government securities
• D)Inventory

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Definitions:

Article 9

Refers to a portion of the Uniform Commercial Code (UCC) that governs secured transactions in personal property.

Business

The organized efforts and activities of individuals to produce and sell goods and services for profit.

Consumer Goods

Items purchased for personal, family, or household use and enjoyment.

Bankruptcy Code

The set of laws in the United States that govern bankruptcy proceedings, providing for the resolution of insolvency issues.