Which of the Following Statements Is True About a Current

question 95

Multiple Choice

Which of the following statements is true about a current ratio of 1.5?

• A) There is $1.50 of current assets available to pay every dollar of current debt.
• B) There is $1.50 of owner's equity available to pay every dollar of total debt.
• C) The current liabilities are to be repaid at 1.5 times their value.
• D) The current liabilities are 1.5 times of current assets.

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Definitions:

Revenues

The total amount of money received by a company for goods sold or services provided during a certain period of time.

Equity

The value of an ownership interest in property, including shareholders' equity in a corporation, representing assets minus liabilities.

Net Income

The total profit of a company after all expenses, including taxes, have been deducted from revenue.

Accounting Equation

The fundamental principle of accounting that states assets equal liabilities plus equity, serving as the foundation for double-entry bookkeeping.