Which of the Following Statements Is True

question 51

Multiple Choice

Which of the following statements is true?

• A)Current assets consist of cash,accounts receivable,inventory,and net plant,property,and equipment.
• B)The quick ratio is a more restrictive measure of a firm's liquidity than the current ratio.
• C)For the average firm,inventory is considered to be more "liquid" than accounts receivable.
• D)A successful firm's current liabilities should always be greater than its current assets.

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Definitions:

Liabilities

Financial obligations or debts owed by a business to others, such as loans, accounts payable, and mortgages, which need to be settled over time.

Long-Term Decisions

Decisions made by management that are expected to have implications for the company over several years, often relating to strategic planning, investments, and organizational structure.

Fixed Costs

Rent, salaries, and insurance are examples of expenses unaffected by changes in production or sales levels.

Variable Costs

Expenditures that fluctuate in accordance with the amount of products made or sold.