The ____ Ratio, Sometimes Called the "Acid Test," Is a More

question 68

Multiple Choice

The ____ ratio, sometimes called the "acid test," is a more stringent measure of ____ than the current ratio.

• A) quick; liquidity
• B) fixed-asset turnover; activity
• C) net profit margin; gross profit margin
• D) None of the above

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Definitions:

Inventory Costing

Inventory costing is the method used to assign costs to inventory, affecting how cost of goods sold and inventory values are calculated.

Gordon's Jewelers

A jewelry retailer known for selling a variety of jewelry items, often focusing on diamond and fine jewelry.

Periodic System

An accounting system where inventory is updated at specific periods rather than continuously, typically used for calculating cost of goods sold at the end of an accounting period.

Ending Inventory

The aggregate value of products available for purchase at the conclusion of a financial period.