If Current Assets Exceed Current Liabilities, Prepaying an Expense on the Last

question 67

Multiple Choice

If current assets exceed current liabilities, prepaying an expense on the last day of the year will:

• A) decrease the current ratio.
• B) increase the acid-test ratio.
• C) decrease the acid-test ratio.
• D) increase the current ratio.

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Definitions:

Job-Order Costing

A cost accounting system that accumulates costs per job rather than by process, suitable for firms producing unique products or jobs.

Plantwide Predetermined

A single predetermined overhead rate that is applied throughout an entire plant or manufacturing facility.

Machine-Hours

A measure of the amount of time that a machine is operated, used as a basis for allocating manufacturing overhead costs in traditional costing systems.

Manufacturing Departments

Divisions within a manufacturing facility, each specializing in different aspects of the production process.