Which of the Following Statements Is Correct

question 22

Multiple Choice

Which of the following statements is correct?

• A) Low liquidity ratios are undesirable.
• B) High liquidity ratios may indicate excessive investments in unproductive current assets.
• C) Low liquidity ratios can indicate liquidity problems.
• D) All of the above statements are correct.

Distinguish between prime costs, conversion costs, and period costs.

Understand the classification and reporting of inventory costs in manufacturing businesses.

Identify characteristics of useful managerial accounting reports.

Understand how managerial accounting supports decision-making within organizations.

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Definitions:

FICA Tax

Federal Insurance Contributions Act tax, which is a United States federal payroll tax imposed on both employees and employers to fund Social Security and Medicare.

FUTA Tax

Federal Unemployment Tax Act tax, which is a payroll or employer tax paid to fund state workforce agencies.

SUTA Tax

State Unemployment Tax Act tax, which is a payroll tax paid by employers based on the state's unemployment insurance rate and the taxable wage base.

Employee Vacation Benefits

Employee vacation benefits refer to the paid time off provided to employees as part of their compensation package, allowing them time to rest and recharge.