Which of the Following Statements Is TRUE

question 89

Multiple Choice

Which of the following statements is TRUE?

• A) Accounts receivable are more liquid than cash.
• B) Notes receivable are always classified as current assets.
• C) Notes receivable usually have longer collection terms than accounts receivable.
• D) Accounts receivable are liabilities.

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Definitions:

Margin of Safety

The difference between actual or projected sales and the break-even point; measures the risk of not covering fixed costs.

Liabilities to Stockholders' Equity

A ratio that measures the amount of liabilities a company has compared to its shareholders' equity.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in using its assets to generate sales or revenue; it is calculated by dividing net sales by average total assets.

Long-term Investments

Investments made with the intention to hold for more than one year, typically in bonds, stocks, or real estate, aiming for long-term capital growth.