The Basic Difference Between the Quick Ratio and the Current

question 18

Multiple Choice

The basic difference between the quick ratio and the current ratio is that the _____.

• A)quick ratio measures liquidity while the current ratio measures profitability
• B)current ratio test is a more difficult one
• C)current ratio includes inventories and marketable securities
• D)current ratio measures only the most liquid assets

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Definitions:

Impairment Loss

The amount by which the carrying value of an asset exceeds its recoverable value, necessitating a write-down of the asset’s value on the balance sheet.

IFRS

International Financial Reporting Standards, which are a set of accounting rules used globally to prepare and present financial statements.

Foreign Currency Transaction

A business operation involving the exchange of currencies from two different countries.

Spot Rate

The current market price at which a particular currency can be bought or sold for immediate delivery.